Asian benzene prices surged $22/mt day on day to be assessed at $673/mt FOB Korea Tuesday, recording the highest price seen in nearly seven months on the back of firmer crude oil and US Gulf prices, as well as prompt demand amid healthy downstream margins.
The FOB Korea benzene marker was last higher on August 13, 2015, at $679.50/mt.
According to several sources, benzene prices in Asia were mainly sentiment driven by the recovery in crude oil prices, as front-month ICE Brent futures breached the $40/b mark for the first time in 2016.
ICE May Brent futures rose $1.40/b day on day to $40.49/b at the close of Asian trading at 4:30 pm Singapore time (0830 GMT) Tuesday.
Prices in the US Gulf were simultaneously supported by firmer crude, rising 21 cents to 229 cents/gal FOB USG Monday, or $684.71/mt.
The FOB USG marker was last assessed higher on December 3, 2015, at 230 cents/gal. With US Gulf as the biggest buyer of Asian benzene, rebounding prices in the Gulf Coast thus provided some support to the sharp gains in Asian benzene prices.
Another factor that fueled bullish sentiments in Asia was prompt demand amid healthy downstream margins, supported by an uptick in styrene monomer prices.
The spread between SM and benzene prices was at $443/mt Tuesday, based on Asian SM prices assessed at $1,116/mt FOB Korea and $1,141/mt CFR China Tuesday, both down $12/mt day on day.
Producers expected a price spread above $250/mt to consider production profitable.
In spite of the SM turnaround season across Northeast Asia, remaining plants were heard operating at full capacity, resulting in steady import demand for benzene from Chinese end-users.
Margins were expected to remain healthy through the second quarter should SM supply remain persistently tight.
Still, it would be difficult for Asian benzene prices to sustain at high levels for a prolonged period as the physical arbitrage windows from South Korea to the US Gulf and China were both temporarily closed, said a Singapore-based trader.
To maintain the uptrend in Asian benzene prices, domestic prices in the US Gulf and China would need to rise quickly, and above the FOB Korea marker for the arbitrage windows to reopen, he added.
On Tuesday, the CFR China marker was assessed at $670/mt, up $11/mt day on day.
Domestic East China prompt prices were last heard at around Yuan 4,900/mt, or $618.40/mt on an import parity basis, while the FOB USG marker fell 12 cents to 217 cents/gal, or $648.83/mt, far below FOB Korea prices.
