The Asian toluene-benzene spread has recently been pressured to multi-month lows on the account of rising energy complex buoying feedstock costs and a weak benzene market, according to market sources.
Asian toluene was assessed at $731/mt FOB Korea, while Asian benzene was assessed at $839.83/mt FOB Korea Monday, leaving the spread at $108.33/mt. The spread was last assessed lower on October 2, 2017, at $105/mt.
Market players noted that narrowing margin was crucial for deciding May operating rates, and if the economics moved into negative territory, toluene disproportionation units will require a longer lead time to shut operations.
"It is not a strength in toluene prices, but a weakness in benzene," a producer commented Monday about the narrowing spread, adding that toluene prices were relatively cheap when compared to feedstock naphtha.
Asian naphtha was assessed at $616.125/mt CFR Japan, leaving the toluene-naphtha spread at $114.875/mt. The average toluene-naphtha spread year to date has been $130/mt.
In the benzene market, demand continued to be suppressed by high inventory levels at East China main ports, with stocks in East China heard at 203,400 mt Monday, up 4,500 mt on the week. Due to continuous high inventory levels, prices are expected to continue tracking price movements in downstream styrene and upstream crude, market participants said late Monday.
Poor downstream demand is another factor that has capped prices at low levels, as downstream production plants of phenol and styrene monomer were heard to be undergoing turnarounds in May and June. However, market participants were optimistic for the months ahead, expecting demand to pick up from June as downstream plants restart after maintenance. - Platts -