The price spread between benzene and its main feedstock toluene plunged 26.7% day on day to a five-month low of $88/mt on an FOB Korea basis Wednesday, below breakeven levels, Platts data showed.
Benzene has to be at a premium of $100-120/mt to toluene for operators of toluene disproportionation and hydrodealkylation units to break even.
The last time the spread was this narrow was February 18 at $82.50/mt.
The benzene-toluene spread narrowed further in morning pegs Thursday to $81/mt, with FOB Korea toluene pegged at $1,126/mt, up $7/mt from the day before, and FOB Korea benzene pegged flat over the same period at $1,207/mt.
Toluene prices on an FOB Korea basis have been driven higher by firm demand in China and higher FOB US Gulf toluene prices, with the FOB Korea toluene marker assessed at $1,119/mt Wednesday, up $16/mt day on day.
The FOB Korea benzene marker was assessed at $1,207/mt Wednesday, down $16/mt amid global length.
The Chinese are buying up toluene for gasoline blending, a trader in China said earlier. Another trader in the country said short covering was another factor supporting prices.
"Supply of benzene is long all over the world," a trader said. "Today the [prompt] spread between styrene monomer and [its main feedstock] benzene is nearly $570/mt. If SM prices had not stayed firm [recently], benzene would have fallen further," a trader said.
