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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
Styrene-benzene spread
Benzene FOB Korea Marker
Styrene FOB Korea Marker
Asia Styrene-Benzene Spread Starts To Narrow
19
Spreads start to come under pressure after experiencing period of strength
Source: Platts
Asia Phenol Margins Negative
20
Source: Platts
-200
300
800
1300
1800
2300
2800
3300
3800
-200
300
800
1300
1800
2300
Benzene FOB Korea Marker
Phenol CFR China Weekly
Phenol-benzene margins
Breakeven
2.3. Europe: Incremental Production Comes Back
Europe Recuperates Strength in Q1
22
Source: Platts
-50
0
50
100
150
200
CIF ARA M1/M2 Structure 2012-2014, $/mt
Styrene Production Margins Sink In Q1
23
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
2000
ARA Styrene/Benzene Spread 2012-2014, $/mt
Source: Platts
Structural Tightness Persists
24
Source: Platts
0
200
400
600
800
1000
1200
1400
1600
1800
CIF ARA Benzene/Naphtha Spread 2012-2014, $/mt
Incremental Production Restarts
25
Source: Platts
900
1000
1100
1200
1300
1400
1500
1600
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
De
c-2
01
2
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
De
c-2
01
3
Jan
-20
14
Feb
-20
14
Mar
-20
14
Ap
r-2
01
4
May
-20
14
Jun
-20
14
ARA Benzene/TDI Grade Toluene Spread 2012-2014, $/mt
3. US Shale Storm vs Asian Aromatics Monsoon 3.1. Upcoming Challenges for US Benzene
US Shifts To Light Feeds
27
• Pygas to decrease 40% • Crude C4 to decrease 20% • Propylene to decrease 20%
• 69% growth in ethane based output • 32% decrease in naphtha based output
Source: Platts Petrochemical Analytics
Yields From Steam Crackers Vary With The Feedstock
28
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Ethane Propane Butane LightNaphtha
Yields by feedstock
Hydrogen/Fuel
Gas Oil
Aromatics
Crude C4s
Propylene
Ethylene
US Benzene Production At Cracker
0
50
100
150
200
250
300
350
400
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Be
nze
ne
Pro
du
ctio
n (
'00
0 M
T/Y
ear
)
Benzene Production
Ethane
Propane
Butane
Full-range Naphtha
Naphtha
Gas Oil
29
US Benzene Demand Will Outpace Supply,
Increasing Volatility & Dependence On Imports
30 Source: Platts Petrochemical
3.2. Asia PX/BZ Expansions
South Korea’s Benzene Exports Surge To The US But China’s Tumble
32
1
10
100
1,000
10,000
100,000
0
20,000
40,000
60,000
80,000
100,000
120,000
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14
South Korea exports to US
South Korea exports to China
South Korea exports to US (Line)
South Korea exports to China (Line)
Source: South Korea customs
Asia PX Expansions – Benzene Oversight
33
Country Company Location Quarter 2014 2015 2016
BZ TL MX PX BZ TL MX PX BZ TL MX PX
China Sinopec Hainan Q1 600
PetroChina Yangzhou - 400 1000
Sinopec Zhenhai - 1600
China Total 2200 400 1000
S.Korea SK Innovation (July) Incheon Q3 450 1300
SK Energy/JX Nippon Oil (June)
Ulsan Q2 300 1000
Samsung Total (June) Daesan Q2 420 1000
GS Caltex/Taiyo Oil/Showa Shell
Yeosu - 400 1000
S. Korea Total 1170 3000 400 1000
India ONGC (Aug/Sep) Mangalore Q3 270 900
Reliance Dahej, Gujarat
Q1 200 1500
Indian Oil Group Vadodara, Gujarat
Q1 370
India Total 270 900 200 1870
SEA Jurong Aromatics (Aug) Singapore Q2 400 800
PetroViet Vietnam Q2 240 700
PTT Global Chemicals Thailand
SEA Total 400 800 240 700
Total BZ start up in 2014: 1.84 mln mt
Source: Platts Petrochemical Analytics
3.3. Europe benzene movements
Western Europe Benzene Balance
35
Source: IMF, CEFIC, Platts Petrochemical Analytics
000 mt
EU Benzene Exports/Imports 2002-2013
36
Source: Eurostat
mt
EU Benzene Exports/Imports 2013
37
267kt
Source: Eurostat
European Crackers Are Less Competitive
38
Source: Bentek, Platts Petrochemical Analytics
Western European Deficit To Increase
39
• WE Europe is expected move from a balanced position to a growing deficit
Source: IMF, CEFIC, Platts Petrochemical Analytics
40 40
Key Middle East Aromatics Projects
Source: Platts
• Could be the growing supplier to other regions
July 2014
Q4 2014
Conclusions
• Downwards push for global benzene
– Weakness in downstream demand
– Additional capacities to come onstream in Asia, Middle East
• Upwards push for global benzene
– Tight US to remain the main global driver
– Europe production to decline amid lower competitiveness
– Potentially reduced run rates at new capacities in Asia
41
© 2013 Platts, McGraw Hill Financial. All rights reserved.
Editor contact information: Ng Baoying
Email: [email protected] Yahoo Messenger: benzene_platts
Phone: +65 6530 6588
Thank you.