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In NE Asia supply of benzene may tighten in the near term

July 15/2011

(ICIS) -- The supply of benzene may tighten in the near term as several hydrodealkylation (HDA) producers in northeast Asia have trimmed production or are considering shutting down units, said traders and producers on Friday.

Several producers in Japan and South Korea have shut, or are planning to shut, their HDA units as margins are in the negative territory, they added. As a result, benzene supply in northeast Asia is tighter compared with June and could remain limited in the near term, said traders. Production margins have been squeezed severely in the past few weeks as feedstock toluene values are almost on a par with benzene.

Spot toluene prices have risen by as much as USD 90/tonne (EUR 64/tonne) since 1 July and were at USD 1.130-1.145/tonne FOB (free on board) Korea on Friday morning, according to ICIS pricing. Toluene prices have spiked in the past two weeks as a result of sudden demand from regional buyers and an upsurge in WTI crude futures, said traders. Benzene values have jumped up by USD 95/tonne since 1 July to USD 1.145-1.155/tonne FOB Korea on Friday.

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