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Global Aromatics Pricing Analysis



Benzene: „„SE Asian term discussions indicate higher prices, US participants eye Asian imports

Staff Reports

Global Aromatics Pricing Analysis



Benzene: „„SE Asian term discussions indicate higher prices, US participants eye Asian imports

Staff Reports



Asian benchmark falls $32/mt on week; European downstream demand subdued



ASIA

With lower Friday discussions mitigating a weekly surge, Asian benzene prices were assessed $5/mt lower from Thursday at $731/mt FOB Korea November 25, on the back of lower trading sentiment.


Although a deal for a January cargo was concluded at $725/mt FOB Korea offscreen during the Platts Market on Close assessment process, a bid at $725/mt FOB Korea for the same laycan remained valid and unchallenged at the end of the MOC process.


ICE January Brent crude futures were 18 cents/b lower day on day at $48.63/b Friday at 0830 GMT.


Although a domestic cargo deal was concluded during the day at Yuan 6,500/mt, end-user discussions were still heard at around $740/mt CFR China for January, with a market source saying that they were wary of buying in a high price environment, amid uncertainties over whether the current levels would last.


A Chinese source explained the surge in domestic prices was driven by prompt demand, with several participants unsure whether the trend had only just begun and therefore stocking up on inventories in case of further price rise.


Analysis continues below...


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Numerous offers for January and February Form E cargoes were seen throughout the day, but these failed to draw any buying interest.


In Southeast Asia, participants were mostly focused on ongoing term discussions. One end-user was heard to have signed on a delivered basis at a double-digit premium to the FOB Korea assessment.


Term discussions for 2017 on a FOB Southeast Asia basis were heard ranging from a discount of $5/mt to a premium of $5/mt to the FOB Korea assessment, facing an average increase of $10/mt from 2016 term levels.


Week on week, the FOB Korea marker was $32.50/mt higher.



EUROPE

The European spot price of benzene plunged $31/mt on Friday to be assessed at $667.50/mt CIF ARA, ending the week up a marginal $3.50/mt from last Friday.


The spot market had surged earlier in the week as global prices firmed considerably, and the benzene arbitrage from Northwest Europe to the US Gulf Coast caught the attention of traders.


The Asian market remains firm, underpinned by strong domestic demand in China. As a result, Asian sellers are exporting less volumes to the US, which in turn will need to fill its shorts by buying material from Europe, sources said on Tuesday.


“It’s a structural fact that the US needs imports, and it is going to need it [from Europe],” a trader source said.


Several deals were heard done for December above $700/mt on Wednesday this week, but on Friday a deal was heard done much lower at $670/mt for December.


Thursday and Friday were relatively quiet in the European benzene market, as the US market was closed for the Thanksgiving holiday season.


Asian benzene prices were assessed $5/mt lower on Friday at $731/mt FOB Korea Friday as sentiment weakened.


The European benzene contract price indicator for December was assessed at $695/mt on Friday, at a $36/mt premium to the November contract price of $659/mt.



LATIN AMERICA

Latin benzene pricing rose $11/mt since Nov. 18, assessed Wednesday at $650-$652/mt FOB Brazil and tracking higher US Gulf Coast pricing.


The marker was assessed Wednesday as the Americas markets will not be assessed Friday in observance of the Thanksgiving holiday in the US.


Friday’s assessment was the marker’s highest in 11-plus weeks since closing at $674-$676/mt FOB Brazil on Sept. 2, 2016, per S&P Global Platts data.


Demand in Brazil was described by a regional source as bettering as November went along. With December expected to feature minimal activity, the source added that many in the industry are wondering if the increase in demand will be short-lived.


Benzene prices in the US -- typically a preferred destination for South American producers with export material -- increased for both prompt- and front-month since Friday, up 3 and 4 cents to 237 cents/gal FOB USG and 238 cents/gal FOB USG, respectively.


The US price increases came amid a stronger energy complex and higher derivative styrene pricing, sources said, adding that low Asia imports during the first half of November was also a contributing factor.


In energy markets, front-month NYMEX crude settled $2.27 higher from Nov. 18 at $47.96/b, putting the benzene-to-crude ratio for WTI at 2.08.


The ICE Brent front-month contract rose $2.09 over the same period to settle at $48.95/b, putting the benzene-to-crude ratio for Brent at 2.03.


The benzene-to-RBOB spread was 94.83 cents/gal, as front-month NYMEX RBOB settled at 142.17 cents/gal, a rise of 8.26 cents from Nov. 18.


In Latin American production, a planned turnaround continues for Braskem’s Camacari plant, Brazil’s largest petrochemical complex.


The Bahia plant has capacity to produce 427,000 metric tons of benzene annually. Official confirmation from Braskem about the duration or which derivatives would be impacted was unavailable.


Market sources had previously indicated one of the two naphtha steam crackers at Camacari would be offline for 45 day as part of a project to retrofit it for ethane cracking and that all derivatives would be impacted for the duration.


The TA is not expected to in any way affect Braskem’s ability to satisfy its domestic demand, regional sources have said, adding that a potential decrease in aromatics exports could come into play.



UNITED STATES

US spot benzene for November assessments was 3 cents higher from Friday at 237 cents/gal on an FOB and DDP basis.


December assessments gained 4 cents on an FOB basis to 238 cents/gal and 5 cents on a DDP basis to 237 cents/gal.


Pricing was higher this week because of low Asian imports during the first half of November, a stronger energy complex and firm derivative pricing, sources said.


Meanwhile, derivative spot styrene for November was assessed stable day on day at 50.80 cents/lb FOB USG, but up 1.35 cents from Friday.


Spot styrene prices moved higher this week amid tight supply and strong Asian demand, sources said.


In energy markets, front-month NYMEX crude settled $2.27 higher from Friday at $47.96/b, putting the benzene-to-crude ratio for WTI at 2.08.


The ICE Brent front-month contract rose $2.09 over the same period to settle at $48.95/b, putting the benzene-to-crude ratio for Brent at 2.03.


The benzene-to-RBOB spread was 94.83 cents/gal, as front-month NYMEX RBOB settled at 142.17 cents/gal, a rise of 8.26 cents from Friday.


Arbitrage opportunities for Asian shipments to the US were closed on paper Wednesday, according to S&P Global Platts data.


The FOB Korea-US spread was minus $10/mt, based on an FOB Korea price of $722/mt and a US December price of $712/mt FOB USG.


The Europe-US arbitrage spread was around $13/mt, based on November pricing at $699/mt FOB Rotterdam.


The US-Europe arbitrage was closed, with the spread around minus $5/mt, based on December pricing at $704/mt CIF ARA and a US November price of $709/mt.


In phenol action, the weekly US spot export assessment was $761-$783/mt (34.50-35.50 cents/lb) FOB USG, while the domestic phenol assessment was $942-$964/mt (41.50-42.50 cents/lb) FOB USG ex-tank.


Toluene commentary: Aromatics demand improving in Brazil, disproportionation margins narrow in US







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