South Korean producers raise 2020 benzene offers

South Korean benzene producers are seeking higher premiums for 2020 term sales with the contract negotiations still in their initial stages.

Premiums to South Korea's domestic consumers are generally about $4/t higher than the 2019 premium. Offers to China-based consumers on a cfr China basis were also made at premiums of more than $10/t to fob South Korea prices. Cfr China contracts this year were done at premiums of $5/t to fob South Korea prices.

This comes on the back of a $2/t increase to this year's term contract purchase finalized by Taiwan state-owned producer CPC. It buys benzene from overseas suppliers and delivers the benzene to Taiwan's domestic consumers. The 2019 term contract for imported benzene was done at a premium of $5/t to fob South Korea prices.

Overall aromatics operating rates in South Korea have been falling. South Korea's Lotte and Hyundai Cosmo reduced their operating rates, following on from a reduction in operating rates to 70pc at Japan's JXTG that started from May.

SK Global Chemicals' pygas feedstock to produce benzene was also reduced in October after the producer reduced operating rates at its naphtha cracker. GS Caltex and Hanwha Total this month reduced operating rates by 10pc and 6pc respectively at their selective toluene disproportionation units. These two producers may not have benzene for export in the coming year. The benzene supply balance in Yosu is currently tight, with the shortage being replaced by benzene from Ulsan to meet December demand.

Most South Korean producers are still working on balances for the coming year and have not made offers yet. These negotiations are expected to get into full swing at the start of December.

Negotiations in southeast Asia appears mixed. Initial offers to benzene consumers in southeast Asia were made at parity to fob South Korea prices on a cfr southeast Asia basis. Benzene contracts for 2019 for delivery to southeast Asia were done at a premium of $5/t to fob South Korea prices.

By Kate Lee

source: Argus Media