Benzene surged Friday as the spot market took off following sharp increases in the US and European markets. The FOB Korea benchmark was assessed at $1,124/mt, up $45.50/mt day on day and $71/mt week on week. On Thursday, FOB US Gulf prices climbed to $1,157/mt.
Based on the FOB Korea benchmark at $1,124/mt and typical freight costs of about $50/mt from South Korea to the USG, the arbitrage window was almost open, as September FOB USG prices stood at 391 cents/gal, or about $1,170/mt, creating a $46/mt spread to the FOB Korea price.
A firmer styrene monomer market was another factor driving the benzene market. A weaker phenol market weighed on market sentiment, in spite of the higher benzene spot prices.
Asian toluene on a FOB Korea basis was assessed at $1,122/mt Friday, up $73.50/mt or 7% from a week ago, amid rising crude and naphtha prices. A large portion of the increase in toluene prices took place Friday, when it climbed $32.50/mt from Thursday. The US toluene price climbed to $1,161/mt FOB USG. The European price was assessed at $1,140/mt FOB Rdam.
Asian isomer-grade mixed xylenes surged $33/mt from a day earlier to close Friday at a seven-week high of $1,194/mt FOB Korea. Upstream, front month ICE Brent futures firmed $3.61/barrel day on day and $7.16/b from last Friday to $117.95/b at 4:30 pm Singapore time (0830 GMT).
Similarly, naphtha tracked the rest of the energy complex to settle at $984.75/mt CFR Japan Friday, up $24.75/mt from a day earlier and up $69.75/mt week on week. The US MX price climbed to $1,157/mt FOB USG, pushed higher by stronger gasoline blend values.
Asian paraxylene surged $24 Friday -- its largest day on day gain in two months -- to end the week at $1,407/mt CFR Taiwan/China. Strong crude prices Friday also helped to push PX back above the $1,400/mt level, making it higher than the July Asia Contract Price, which settled at $1,400/mt CFR. The US paraxylene price climbed to $1,467.50/mt FOB USG on Thursday. Looking forward, industry watchers in Asia said it was hard to decipher the price trend as buyers and sellers kept rotating their roles.
Producers were both selling and buying, while end-users were toying with the idea of off-loading their PX feedstock now that the spot price was higher than the ACP.
Asian styrene monomer prices surged $74/mt week on week Friday to $1,430/mt FOB Korea. Prices were boosted by strong sentiment in China, coupled with fast-rising energy prices. Upstream benzene surged $45.50/mt day on day Friday to $1,124/mt FOB Korea, regaining some ground against SM. As a result, the SM-benzene spread narrowed $30.50/mt from Thursday to close the week at $305.50/mt. But the profitability of SM production increased by $11.20/mt week on week to $59.80/mt Friday, based on current feedstock prices and an estimated conversion cost of $150/mt. SM producers in South Korea and China are running their plants at full rates due to the healthy margins, sources said, and some producers confirmed this.
Nonetheless, market sentiment remained bullish this week, as prompt spot cargo supply in China's domestic market is said to be limited and market participants expect the Chinese government to loosen its monetary policy in the second half of the year, increasing credit, cash flow and market liquidity. In the US, a 63 cents/lb deal was heard done on Thursday, pushing the assessment to $1,388/mt FOB USG.
