China’s demand for imported benzene has started to rise, market sources said Tuesday, January 13, as FOB Korea benzene prices trend lower on falling crude levels while domestic China benzene supplies tighten.
“This situation lasted from last week,” said a source at an end user in China, who noted that domestic inventory levels were low.
“Chinese end-users keep buying. They bought 40,000 mt last week,” said a source at a producer in South Korea.
China’s import demand for benzene has been flagging since April last year.
Since then, China imported less than 50,000 mt of benzene each month, compared to 59,000-83,000 mt a month over January to March.
In 2013, China imported an average of 73,876 mt of benzene monthly.
On Monday, the domestic price in China was heard at around Yuan 4,800/mt or $643.17/mt on an import parity basis, $63.17/mt above the FOB Korea assessment on Monday, at $580/mt.
This difference more than covers the cost of freight from South Korea to East China, which was assessed at $25-28/mt.
Discussions were thin on Tuesday with crude prices trending lower, although a source noted that the offer for domestic China benzene was around Yuan 4,700/mt.
There was no firm bid available, although a notional level of Yuan 4,600/mt would be around $615.80/mt on an import parity basis, $75.80/mt above the FOB Korea benzene assessment on Tuesday of $540/mt.
A trader said Chinese buyers had been surfacing in the FOB Korea market.
“Chinese domestic prices are higher, so he has to buy from the spot market,” he said, referring to a company that has been bidding in the FOB Korea market recently.
But trading may be limited by credit issues.
A trader in China said that due to credit problems: “There is a seller, but [it] cannot find reliable buyers”.
The source at the producer in South Korea said he also could not trade with Chinese traders.
Illustrating the effect on trade of the credit troubles, early Tuesday, a relative newcomer in the FOB Korea spot market was seen bidding $5/mt above an offer by a trader who was offering March FOB Korea benzene at $565/mt.
There was no deal done, as the seller was not able to trade with the buyer.
– Platts.com
