Asian benzene prices continued to fall on Friday amid concerns over falling benzene demand in the US and Southeast Asia.
Market participants attributed the poor US demand to declarations of force majeure this month in the styrene and phenol markets. Benzene is the main feedstock for both SM and phenol.
The FOB Korea benzene benchmark was assessed down $13.50/mt from Thursday at $1,149/mt Friday. In Southeast Asia, a BASF-Shell joint venture in Singapore -- Ellba Eastern's 550,000 mt/year styrene monomer/propylene oxide plant -- has declared force majeure on SM supply. The plant shut last Friday and a force majeure was issued the same day. The shutdown has resulted in surplus benzene feedstock.
According to a market source, there was an inquiry in the shipping market for a Shell-approved vessel to transport 3,000-9,000 mt of benzene from Singapore to the US Gulf, for loading between end March and early April. From Southeast Asia, a charterer is seeking to ship about 6,000-12,000 mt of benzene from Tuban, Indonesia/Kertih, Malaysia over end-March to early April to Al Jubail.
A benzene shortage in Japan caused by the March 11 earthquake seems to have been met by about 10,000 mt of benzene secured from South Korea for April. Japan's largest refiner, JX Nippon Oil & Energy, has estimated that it will reach full production at its 270,000 b/d Negishi refinery in Tokyo Bay around March 31. The Negishi facility can make about 145,000 mt/year of benzene. JX Nippon is expected to restart its naphtha-fed steam cracker at Kawasaki, eastern Japan, around March 27, which supports a 107,000 mt/year pyrolysis gasoline-based benzene unit.
The US benzene price fell slightly on Thursday to $1,151.15/mt FOB USG.
The European price was assessed at $1,203.50/mt CIF ARA on Thursday. This morning in Europe, April benzene was heard bid at $1,190/mt and offered at $1,205/mt CIF ARA. May was heard bid at $1,190/mt and offered at $1,210/mt CIF ARA.
The Asian toluene price climbed slightly overnight to $1,070/mt FOB Korea, shown in blue below. During the week, prompt demand for toluene increased in Asia on potential blend demand.
"Front end cargoes [were] thin, all went to Japanese gasoline," said a trader, who also thought that a backwardated market could develop and last until Japan recovers from the present situation. The US toluene price was assessed at $1,109/mt FOB USG, remaining the highest-priced region globally.
The European price was at a nearly $60 discount to the US price at $1,050/mt FOB Rotterdam.
Asian isomer-grade mixed xylene prices climbed $7 on Friday to $1,216.50/mt FOB Korea despite continued softening in the Asian paraxylene market. The US Price was stable at $1,205/mt FOB USG on Thursday. During the past week, the US mixed xylene price has climbed more than $40/mt.
Asian paraxylene continued to fall for the fourth straight day, ending at $1,726.50/mt CFR Taiwan/China. With March coming to an end, Chinese end-users said they are seeing more April cargoes being floated in the market now.
"Traders are now trying to get rid of April cargoes," a PTA maker said.
"Prices are expected to plunge." Another PTA maker felt that PX prices should fall back to around $1,600/mt CFR "which was where the market was headed before Japan's earthquake."
The April Asia Contract Price was nominated between $1,800-1,810/mt CFR.
All nominations will expire on March 31. Sinopec on Friday concluded its March PX contract price at Yuan 13,500/mt, which is equivalent to $1,720/mt on import parity basis.
The US paraxylene price fell to $1,722.50/mt FOB USG -- down $50 from Wednesday. The European paraxylene price was assessed Thursday at $1,720/mt FOB Rdam.
Asian styrene monomer climbed $2 on Friday to $1,392/mt FOB Korea. For the week, though, prices fell about $26 from last Friday. Industry sources said some Chinese EPS plants had recently shut down and some construction had been halted due to plans to impose new fire safety standards for materials used in construction in China.
"Its really hurting," an international SM trader said Friday about the impact of the new regulations on EPS, adding that despite the many turnarounds scheduled over March-May, he could still see a lot of supply, so "it's slow." But he did not expect the impact of the EPS slowdown to last long and a meeting was scheduled to be held in China in early April between the involved parties in a bid to resolve the problem.
"Everybody guesses it will be solved successfully with some time limit to adjust [to the regulations]," another trader said.
East China's inventory level of SM was heard increasing to 145,000 mt, up from 130,000-140,000 mt last week. No big impact was seen on the market after Ellba Eastern declared force majeure on styrene monomer supply from its 550,000 mt/year styrene monomer/propylene oxide plant in Singapore last Friday.
The US styrene price was stable near $1,477/mt FOB USG on Thursday, though variable costs were pushed higher by a 3-cent gain in the US ethylene market. The European styrene price fell to $1,480/mt FOB Rotterdam on Thursday.
This morning in Europe, April and May styrene was heard offered at $1,480/mt FOB Rotterdam.
