Benchmark FOB Korea benzene was assessed at $595.67/mt Tuesday, down $20.33/mt from Monday, and falling below the $600/mt mark for the first time in 28 months.
Prices were last lower on August 2, 2016, at $595/mt FOB Korea.
While prices have been on a downtrend since October, market participants were caught by surprise by the extent of decline in the Asian benzene market.
"[We] didn't expect [prices] to close below $600/mt," a market source said Wednesday.
Earlier, market sources had said that it would be unlikely that prices would fall below $600/mt, as demand from China was still firm amid an open import-domestic arbitrage window. This happens when imported cargoes are first stored in domestic tanks in East China, and subsequently sold in Yuan-denominated parcels.
The weakness in demand was attributed to poor US benzene prices, as the spot arbitrage between South Korea and US was tightly shut on paper.
December DDP USG benzene was assessed 187 cents/gal Tuesday, or $559.13/mt. With February FOB USG paper assessed at 201 cents/gal ($600.99/mt), just $5.32/mt higher relative to FOB Korea, the arbitrage window remains theoretically shut.
Nevertheless, the US remains a key export market for FOB Korea benzene, and an increase in shipment of benzene from South Korea to the US for January-arrival was seen between December 1-11.
Ballpark figures of South Korean statistics showed that the country exported 76,141 mt of benzene between December 1-11, of which 23.6% of the total volume was headed to the US, up from 7.8% in November.
Market participants were hoping for US benzene prices to recover so that it would provide some support to Asian benzene prices.
