Graph Analysis
DeWitt's News
 
Key Drivers - Jan 05,2012

Benzene & Styrene

Americas January contract moves to $3.70 per gallon. Spot deals done as high as 61.5 cents per pound.
Europe Two contract prices are confirmed, both showing increases in excess of $200. Contract prices have risen but reflect only in part the rise in raw material costs.
Asia Firm USG market, re-opening arb window drives trader demand, Asian prices. SM firms up in line with benzene, firmer demand from China.
Special Reports
 
Supply & Demand
 
Market Commentary

Benzene - Newsletter#: 1795
Date: 02/10/2011

For the most up-to-date information, become a subscriber by us at webmaster@dewittworld.com.

Americas

The benzene market firmed slightly this week, and the forward price curve flattened, as prices negotiated for outer months strengthened, relative to February. February deals were done at steadily higher prices, moving up from $4.15 on Tuesday to $4.23 per gallon yesterday. March moved from $4.03 to $4.21 and April barrels, which were bid as low as $3.95 earlier in the week, were sold today at $4.04 per gallon for any DDP. Benzene supplies remain limited by low reformer operating rates, strong preference for light feeds into olefins units (which yield much less benzene-rich pygas) and reduced import volumes. More imports are expected from Asia in the next 4-6 weeks, but this additional volume offsets lost imports from Brazil, St Croix, and Saudi Arabia. Brazilian volumes remain limited due to utility constraints, St. Croix’s most recent 10 KT cargo was diverted to Europe and Saudi Arabia, which shipped 200 KT to the USA in 2010, will not have volume in the USA before May. Prices have been supported by the European market, not by strong demand in the USA. Very little volume of benzene derivatives has shipped recently, but this could change in the near term if Asian and European styrene prices move up, and the USA can again take advantage of its substantial ethylene cost advantage. If the USA is not able to move styrene to Europe and Asia, we expect benzene prices to move lower as US styrene rates, and overall benzene demand, are reduced. With Asian paraxylene margins over naphtha above $700, that region will continue to run reformers and STDP units at very high rates, producing large volumes of by-product benzene. At current price levels, Chinese coal tar benzene economics are also very strong, and, as we saw in Q2 2010, China could again export volumes of benzene. U.S. production could also be increased in the near future. As winter draws to a close, integrated refiners may run leftover gasoil inventory through ethylene units, yielding more pygas. Additionally, as the U.S. refiners begin to produce low vapor pressure summer grade gasoline, reformers should be run at higher rates. This will also yield an important increment of benzene supply. On margins, higher naphtha blend value and a small reduction in toluene price resulted in a slight decline in reformate extraction’s attractive margins. All toluene conversion is profitable, but due to the backwardation in benzene price, and anticipated higher toluene blend values for summer gasoline production, Dow has decided not to restart its HDA in Plaquemine, LA. Total’s TDP in Port Arthur is running again after brief downtime for maintenance.

Europe

Spot prices for February have been trading close to contract, with transactions confirmed in the range $1350-$1377. March has continued to trade at a discount of the order of $50, though there is a premium for first half of the month. April shows a similar discount to March, with prices discussed in the mid-$1200’s. Margins remain exceptionally strong for all three months, with naphtha trading in the $850–$860 range. Prompt product is available, but at a price. The backwardation in the market reflects the expectation of imports from Asia in March. One vessel from Korea is reported due for arrival early March, but the bulk of the product from East Asia, 35-40kt in total, is not expected before 2H March. This quantity of material will probably do no more than cover the planned extraction outages in the Netherlands in March and April. Between 5 and 10kt is understood to have been fixed for shipment from the US for more prompt arrival. Shipments from India for Feb/Mar arrival amount to at least 24kt, but much of this material is destined for Spain, where there is reported to be an aromatics outage at Huelva in February as part of wider refinery maintenance work. Pygas remains available, as is usual at this time of year, but propane prices dropped below naphtha recently and there has been some switching of crackers from naphtha to LPG. The effects of feedstock changes are likely to start to be felt in Q2, when cracker maintenance will also reduce pygas production. Cutbacks in EB/SM production rates will have some impact on benzene demand, but other derivatives continue to run at high levels. Balances look set to remain tight at least until April.

Asia

It has been another abbreviated week for spot discussions with few deals done between last Thursday and Tuesday. As expected, end users – especially in China – were slow to return from Lunar New Year holidays due to cold weather. Traders were in no rush to take positions as well with growing uncertainty regarding China and USG demand going into spring as well as weaker crude oil and naphtha prices over the holiday interim. There were no spot discussions on Thursday and Friday with players still on break. Monday and Tuesday saw offers at $1140-$1145 FOB Korea in line with pre-holiday figures, but bids had dropped to $1120-$1125 FOB Korea with naphtha down $5/MT to $870 CFR Japan while Brent crude dipped below the $100/bbl mark. By Wednesday, the majority of Chinese players were back at work, leading to an increase in spot activity. Wednesday saw three deals done at $1133-$1135 FOB Korea for any March. April was in backwardation with offers at $1125 FOB Korea due to the aforementioned uncertainty regarding benzene demand for Q2. Activity picked up further today with trader confidence boosted by moderate gains in USG and European spot markets the previous night. A total of 4 deals were done at $1135-$1138 FOB Korea all for any April. Similar to yesterday, March has maintained a $10 premium with bid/ask at $1145/$1150 FOB Korea. Looking ahead, supply should increasingly shift towards balanced as delayed cargoes from November/December are able to depart from Korea to the USG in January and February. The big question going forward is demand. US benzene requirements are expected to dip considering poor arbitrage economics which makes it virtually impossible to export styrene to Asia going forward. Within Asia itself, China is currently long styrene with inventories at over 150 KT and raising questions about how strong restocking demand will be once producers return from their spring turnarounds in March and April. Another issue is how China’s increase in bank reserve ratios and interest rates will impact end-users’ abilities to obtain credit, especially at the start of gasoline season in mid-to-late Q2. The uncertainty should keep April backwardated over March in the near term with the majority of buyers waiting for clearer direction from the China markets
Daily Prices

Benzene

For the most up-to-date information, become a subscriber by us at webmaster@dewittworld.com.

Unit

Market Date: 12/08/2011

RegionPriceUnitTypeDeliveryBidAskVolComments
Americas 1,036 $/MT DDPDecember 20 Freeport
  1,033 $/MT FOBDecember 20  
  1,033 $/MT DDPDecember 20  
  1,060 $/MT DDPJanuary 20 On the River
West Europe 1,010 $/MT CIFDecember 1,000  
  1,040 $/MT CIFJanuary 1,000  
  $/MT CIFJanuary 1,030 1,040  
  $/MT CIFDecember 1,005 1,015  
Asia Pacific 1,050 $/MT FOBDecember 3,000  
  $/MT FOBFebruary 1,030 1,040 3,000  
  $/MT FOBJanuary 1,020 1,035 3,000  
         

Historical Pricing
 
E S P