East China benzene prices surged to fresh new highs during early morning Feb. 18 trade, as markets in China re-opened after a week-long Lunar New year holiday, and tried to catch-up with the huge gains in US dollar markets.
Sinopec, China's biggest seller of benzene, raised its East China listed price by Yuan 400/mt in the morning of Feb. 18, to Yuan 5,800/mt. This marks the largest hike that the company has made since S&P Global Platts first assessed the marker on Dec. 3, 2018.
The FOB Korea benzene benchmark has surged $57/mt since the start of the week, and while market participants were mixed on the longevity of the bullish run, most sources were in agreement that East China market values would rise to close the value gap between FOB Korea and East China cargoes.
One market source said that East China's benzene stocks were sufficient, and this would cap the surge in East China prices. Another commented that East China's prices would probably not be able to "rise as much", adding that the CFR China-East China cargo arbitrage window could close.
The increase in benzene prices have been due to outages both in benzene and downstream styrene plants.
As benzene is a globally traded product, with the US being one of the biggest buyers of South Korean material, changes in US supply and demand have affected Asian sentiment.
Sub-freezing temperatures in the US have taken a number of refiners offline.
Exxon was reportedly down at its Baytown facility, S&P Global Platts reported. The company has an estimated benzene production capacity of 730,000 mt/year at the site. Total shut its Port Arthur facility following a loss of steam, according to information on the Texas Commission on Environmental Quality website. The reformer at Port Arthur has an estimated benzene capacity of 104,000/mt year.
TCEQ filings also showed that Citgo had shut its plants at Corpus Christi, where the company has a benzene capacity of 167,000 mt/year. Shell had shut its Deer Park refinery where its benzene production capacity stands 217,000 mt/year, Platts previously reported.
Additionally, Flint Hills, which has a benzene production capacity of 343,000 mt/year at Corpus Christi, is reportedly down, according to TCEQ.
In total, an estimated 1.561 million mt/year of benzene has been impacted by storm-related outages, which suggests that the US Gulf Coast could lose as much as 4,277 mt of benzene per day.
However, a market source added that shutdown of styrene plants were larger in terms of volume than that of benzene, and the net effect for benzene should be one of growing length.
