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Global benzene market: Changes and trade flows - Platts benzene market: Changes and trade flows Ng...

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  • 2013 Platts, McGraw Hill Financial. All rights reserved.

    Global benzene market: Changes and trade flows Ng Baoying Senior Editor Asia Petrochemicals

  • Global Panoramic Picture Strength in the US draws volumes from Asia, and Europe

    Regional Zoom-In

    Production Margins And The State Of Derivatives Demand

    US Shale Storm vs Asian Aromatics Monsoon

    Platts Outlook For Regional Balances

  • 1. Global Panoramic Picture Strength in the US draws volumes from Asia, and Europe

  • Return of the global disconnect

    4

    Source: Platts

    900

    1000

    1100

    1200

    1300

    1400

    1500

    1600

    1700

    3-J

    an-1

    2

    3-F

    eb

    -12

    3-M

    ar-1

    2

    3-A

    pr-

    12

    3-M

    ay-1

    2

    3-J

    un

    -12

    3-J

    ul-

    12

    3-A

    ug-

    12

    3-S

    ep

    -12

    3-O

    ct-1

    2

    3-N

    ov-

    12

    3-D

    ec-1

    2

    3-J

    an-1

    3

    3-F

    eb

    -13

    3-M

    ar-1

    3

    3-A

    pr-

    13

    3-M

    ay-1

    3

    3-J

    un

    -13

    3-J

    ul-

    13

    3-A

    ug-

    13

    3-S

    ep

    -13

    3-O

    ct-1

    3

    3-N

    ov-

    13

    3-D

    ec-1

    3

    3-J

    an-1

    4

    3-F

    eb

    -14

    3-M

    ar-1

    4

    3-A

    pr-

    14

    3-M

    ay-1

    4

    3-J

    un

    -14

    3-J

    ul-

    14

    3-A

    ug-

    14

    Benzene FOB Korea Marker

    Benzene FOB USG Mo02 $/mt

    Benzene CIF ARA

  • 950

    1050

    1150

    1250

    1350

    1450

    1550

    1650

    1750

    3-J

    an-1

    2

    3-F

    eb

    -12

    3-M

    ar-1

    2

    3-A

    pr-

    12

    3-M

    ay-1

    2

    3-J

    un

    -12

    3-J

    ul-

    12

    3-A

    ug-

    12

    3-S

    ep

    -12

    3-O

    ct-1

    2

    3-N

    ov-

    12

    3-D

    ec-1

    2

    3-J

    an-1

    3

    3-F

    eb

    -13

    3-M

    ar-1

    3

    3-A

    pr-

    13

    3-M

    ay-1

    3

    3-J

    un

    -13

    3-J

    ul-

    13

    3-A

    ug-

    13

    3-S

    ep

    -13

    3-O

    ct-1

    3

    3-N

    ov-

    13

    3-D

    ec-1

    3

    3-J

    an-1

    4

    3-F

    eb

    -14

    3-M

    ar-1

    4

    3-A

    pr-

    14

    3-M

    ay-1

    4

    3-J

    un

    -14

    3-J

    ul-

    14

    3-A

    ug-

    14

    Benzene FOB Korea Marker

    Benzene FOB USG Mo02 $/mt

    FOB US Gulf vs FOB Korea Benzene

    5

    Source: Platts

    Spread between Asia and US benzene widens and stays wide

  • -100

    -50

    0

    50

    100

    150

    200

    250

    300

    350

    400

    FOB USG less FOB Korea

    US Benzene Price Spread To Asia Wide

    6

    Arbitrage window open for about five months

    Arbitrage window shuts for three weeks then reopens amid firm US prices

    Source: Platts

  • -150

    -100

    -50

    0

    50

    100

    150

    200

    250

    300

    350

    Arbitrage Margin

    US-Asia Arbitrage Margin (Less Freight)

    7

    Margins stay firm for most of 2014 apart from a dip in June

    Source: Platts

  • 1000

    1100

    1200

    1300

    1400

    1500

    1600

    3-J

    an-1

    2

    3-F

    eb

    -12

    3-M

    ar-1

    2

    3-A

    pr-

    12

    3-M

    ay-1

    2

    3-J

    un

    -12

    3-J

    ul-

    12

    3-A

    ug-

    12

    3-S

    ep

    -12

    3-O

    ct-1

    2

    3-N

    ov-

    12

    3-D

    ec-1

    2

    3-J

    an-1

    3

    3-F

    eb

    -13

    3-M

    ar-1

    3

    3-A

    pr-

    13

    3-M

    ay-1

    3

    3-J

    un

    -13

    3-J

    ul-

    13

    3-A

    ug-

    13

    3-S

    ep

    -13

    3-O

    ct-1

    3

    3-N

    ov-

    13

    3-D

    ec-1

    3

    3-J

    an-1

    4

    3-F

    eb

    -14

    3-M

    ar-1

    4

    3-A

    pr-

    14

    3-M

    ay-1

    4

    3-J

    un

    -14

    3-J

    ul-

    14

    3-A

    ug-

    14

    CIF ARA Benzene price 2012-2014, $/mt

    Benzene CIF ARA

    European Prices Hit Record Highs

    8

    Source: Platts

  • US Pulls European Molecules Too

    9

    Source: Platts

    -300

    -250

    -200

    -150

    -100

    -50

    0

    50

    100

    150

    200

    Jan

    -20

    12

    Feb

    -20

    12

    Mar

    -20

    12

    Ap

    r-2

    01

    2

    May

    -20

    12

    Jun

    -20

    12

    Jul-

    20

    12

    Au

    g-2

    01

    2

    Sep

    -20

    12

    Oct

    -20

    12

    No

    v-2

    012

    Dec

    -20

    12

    Jan

    -20

    13

    Feb

    -20

    13

    Mar

    -20

    13

    Ap

    r-2

    01

    3

    May

    -20

    13

    Jun

    -20

    13

    Jul-

    20

    13

    Au

    g-2

    01

    3

    Sep

    -20

    13

    Oct

    -20

    13

    No

    v-2

    013

    Dec

    -20

    13

    Jan

    -20

    14

    Feb

    -20

    14

    Mar

    -20

    14

    Ap

    r-2

    01

    4

    May

    -20

    14

    Jun

    -20

    14

    Cross-Atlantic Arbitrage 2012-2014, $/mt

    Arb Europe-US to M1Arb Europe-US to M2Arb US-Europe to M1Arb US-Europe to M2

  • One Way Ticket

    10

    Source: Eurostat

    0

    10,000

    20,000

    30,000

    40,000

    50,000

    60,000

    70,000

    80,000

    Jan

    . 20

    12

    Feb

    . 20

    12

    Mar

    . 20

    12

    Ap

    r. 2

    01

    2

    May

    . 20

    12

    Jun

    . 20

    12

    Jul.

    20

    12

    Au

    g. 2

    01

    2

    Sep

    . 20

    12

    Oct

    . 20

    12

    No

    v. 2

    01

    2

    Dec

    . 20

    12

    Jan

    . 20

    13

    Feb

    . 20

    13

    Mar

    . 20

    13

    Ap

    r. 2

    01

    3

    May

    . 20

    13

    Jun

    . 20

    13

    Jul.

    20

    13

    Au

    g. 2

    01

    3

    Sep

    . 20

    13

    Oct

    . 20

    13

    No

    v. 2

    01

    3

    Dec

    . 20

    13

    Jan

    . 20

    14

    Feb

    . 20

    14

    Mar

    . 20

    14

    Ap

    r. 2

    01

    4

    EU-US Trade Flow 2012-2014, mt

    EU->US

    US->EU

  • 2. Regional Zoom-In 2.1 US: Production Margins And The State Of Derivatives Demand

  • US Benzene & Styrene Trends

    12

    1000

    1100

    1200

    1300

    1400

    1500

    1600

    1700

    1800

    Jan

    -20

    12

    Feb

    -20

    12

    Mar

    -20

    12

    Ap

    r-2

    01

    2

    May

    -20

    12

    Jun

    -20

    12

    Jul-

    20

    12

    Au

    g-2

    01

    2

    Sep

    -20

    12

    Oct

    -20

    12

    No

    v-2

    012

    Dec

    -20

    12

    Jan

    -20

    13

    Feb

    -20

    13

    Mar

    -20

    13

    Ap

    r-2

    01

    3

    May

    -20

    13

    Jun

    -20

    13

    Jul-

    20

    13

    Au

    g-2

    01

    3

    Sep

    -20

    13

    Oct

    -20

    13

    No

    v-2

    013

    Dec

    -20

    13

    Jan

    -20

    14

    Feb

    -20

    14

    Mar

    -20

    14

    Ap

    r-2

    01

    4

    May

    -20

    14

    Benzene

    Styrene

    Source: Platts

  • US Phenol & Benzene Price Trends

    13

    1100

    1200

    1300

    1400

    1500

    1600

    1700

    US Phenol

    US Benzene

    Source: Platts

  • Weaker US Derivative Demand

    14

    -

    1,000,000

    2,000,000

    3,000,000

    4,000,000

    5,000,000

    6,000,000

    mlb

    s

    US benzene and derivative demand

    BENZENE DEMAND (mlbs)

    US STYRENE DEMAND (mlbs)

    US CUMENE DEMAND (mlbs)

    Source: Platts

  • 2.2. Asia: Strong Production Economics

  • Asia Benzene To Naphtha Spread Healthy

    16

    Source: Platts

    -200

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600Benzene-naphtha spread

    Benzene FOB Korea Marker

    Naphtha C+F Japan Cargo

  • -500

    0

    500

    1000

    1500

    2000

    PX-Benzene spread

    Paraxylene FOB Korea Marker

    Benzene FOB Korea Marker

    Asia Benzene Rise Past PX Temporarily

    17

    PX prices weaken on soft downstream. Run rate reduction eats into benzene supply

    Source: Platts

  • Asia Toluene Attractive For Benzene Production

    18

    Source: Platts

    -200

    -100

    0

    100

    200

    300

    400

    500

    600

    700

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    Benzene-Toluene spread

    Benzene FOB Korea Marker

    Toluene FOB Korea Marker

  • 0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    1800

    2000

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