Sentiment for Asian benzene remained under downward pressure as market activity tapered off amid the year-end lull period.
Market players have started to negotiate next year’s contract with trading activity in a low ebb.
Spot prices on an FOB (free on board) Korea basis tumbled below $630/tonne level, from around $751/tonne in the middle of September, ICIS data showed.
Talk of increased supply in China circulated the market with buyers opining that rollover of next year’s contracts on the same discounts this year would be proper.
However, some sellers pointed to the market uptrend in the first nine months of the year as evidence that supply was not as ample as the market had perceived, or at least, demand was sufficient to meet and even surpass supply.
Benzene is used to produce a number of intermediates that are used to create polymers, solvents and detergents.
Meanwhile, trade has tapered off with the arbitrage window to the US closed from September.
Weaker prices in the US in recent weeks have also dampened the Asian market.
Supply in Southeast Asia is expected to increase as Malaysia’s PETRONAS Pengerang Refirnery and Petrochemical (PRef-Chem) 160,000 tonne/year benzene unit and Brunei Hengyi Petrochemical’s 500,000 tonne/year benzene line are expected to start loading cargoes some time in November.
“Year-end demand is usually slower as players are in negotiations for next year’s contracts,” said a trader in Singapore.
At the same time, the ongoing trade war between China and the US has also dampened import demand in China.
Chinese domestic prices were also on the decline in October as buying momentum remained slack after the National Day holidays in the early part of the month.
Domestic prices in eastern China slumped below yuan (CNY) 5,200/tonne ex-tank from more than CNY5,800/tonne ex-tank in early October.- Source: ICIS-