japan energy corp
By the end of 2008 the
slump in downstream
demand had led to
biting cutbacks in
aromatics production
Future plans in the balance
The future remains uncertain as the global economic meltdown
takes its toll on Asia’s aromatics markets. Only toluene is bucking
the trend. Keisuke Uematsu of The Chemical Daily reports
The markets for key aromatics
benzene, toluene and xylenes
followed the same trend as other
petrochemicals in 2008, moving
to record highs in July as crude
oil prices powered to US$147/
bbl, then falling precipitously in
October and November as both
demand and prices crashed.
By end-2008, petroleum refiners
and petrochemical producers had
been forced to implement biting
cutbacks in aromatics production
because of the slump in downstream
demand, both for the polyester
chain and for benzene derivatives,
used heavily in the automotive and
housing industries.
Prices hit bottom in late November
2008, and bounced back a
little in the first quarter of 2009 as
oil prices stabilised and then firmed,
but it was still not clear as this
publication was finalised whether
or not demand will recover. In the
meantime, producers were giving
serious consideration to the status
of new projects and expansion
plans, and delays and cancellations
were a distinct possibility.
Relatively tight supply and
skyrocketing crude oil and naphtha
prices pushed Asian benzene spot
prices to peaks above US$1300/
tonne fob Korea in July 2008. The
Asian contract price (ACP) for
benzene moved higher than the US
contract price (USCP) at the same
time. The ACPs for June and July
were $20 and $77 higher than the
USCP, respectively. As a result, the
normal trade flows of benzene from
� Normal trade flows of
benzene from Asia to the
US were halted, keeping US
prices high and supply tight
Asia to the US were halted, keeping
US prices high and supply tight
until the end of the gasoline season
in September.
The onset of the global financial
and economic crisis in September
2008 brought the tight supply
scenario to an abrupt halt as
demand evaporated. The South
Korean fob spot price fell from
$1100/tonne in September to below
$300/tonne in November. The
November ACP price was down
$690 at $370/tonne. Although crude
oil prices were also falling, the
benzene market fell faster, killing
margins. At one stage the spread
between Dubai crude oil and the
Asian benzene price was negative.
However, the production
cutbacks implemented for other
core petrochemicals in response
to the Q4 collapse in derivatives
demand was a less straightforward
COnTInued On PAge 15
Prepared for APIC 2009 by The Chemical Daily and ICIS 13
markets
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