The spread between benzene and feedstock naphtha in Asia widened to an eight-month high of $442.63/mt on Friday, as soaring benzene prices in the US has opened up arbitrage opportunities and supported the Asian market.
Platts assessed benzene at $1,364/mt FOB Korea, down $2.50/mt day on day, while naphtha finished $7.21/mt lower at $921.38/mt CFR Japan.
The last time the Asian benzene-naphtha spread was wider was on May 23, 2013, when it stood at 444.63/mt. Asian benzene producers typically need a spread of $150/mt over naphtha to break even.
On January 15, US spot benzene reached a record high for a second consecutive trading session at $5.53/gal ($1,655.13/mt) FOB US Gulf Coast, as inventories remained low and market participants were looking to cover short positions, sources said at the time. A day later, the European spot price of benzene surged to a high of $1,532.50/mt CIF ARA, the highest level recorded by Platts since it started assessing European benzene in May 2004.
Although Asian benzene prices have not risen at a similar pace as in the US and Europe, the FOB Korea benchmark hit a 10-month high of $1,368.50/mt FOB Korea on January 15.
Based on Friday's closing prices, the arbitrage window for sending cargoes from Asia to the US opened up further. Asian benzene was assessed at $1,364/mt FOB Korea while US benzene closed at 542 cents/gal ($1,620.60/mt) FOB US Gulf -- putting the spread between the two regions at $256.60/mt on Friday, significantly higher than the $68-73/mt freight cost required to send 10,000 mt cargoes parcels from South Korea to the US Gulf.
A market source based in Asia said Monday that the amount of benzene exported by South Korea to the US so far in January is more than 33,000 mt. This is up 38% from South Korea's exports to the US in December, which stood at 23,871 mt, according to South Korean customs data.
