Weak Gasoline Demand to Weigh on Asia Aromatics in Q2
SINGAPORE (ICIS news)--Asian benzene and toluene may not enjoy their usual price spike starting from March or April this year on expectations that US gasoline demand would fall sharply amid the global economic turmoil, producers and traders said on Monday.
Toluene and mixed xylenes are used as blending agents in gasoline production in the US and in some parts of Asia.
A sharp uptrend in Asian prices normally starts around the second quarter each year, tracking US aromatics, as the period is characterized by high gasoline demand. During this time, Americans tank up their cars for the summer driving season that spans the celebration of Memorial Day in late May and Labour Day in early September.
“This year the market is not so optimistic,” said a key southeast Asia-based trader of toluene and mixed xylene.
“We expect this year will be different from other years, and don’t expect much demand from the gasoline segment,” said a Japan-based toluene trader.
The slump in car sales and the rise in unemployment rate because of the global economic downturn will drive down demand for gasoline not just in the US but also in Asia, market sources said.
Gasoline demand in Asia usually kicks in during the August-September period when countries like Japan and South Korea have summer holidays, said a regional aromatics trader.
“Japan’s car sales are so slow, it dropped by about 32% in February this year, so how (can we) expect gasoline demand (to rise),” a southeast Asia-based trader said.
Consequently, price gains of benzene and toluene in this region would be limited in the second quarter of this year, traders said.
Last year, benzene prices shot up by $245/tonne (€194/tonne) or 22% from mid-April to $1,335-1,345/tonne FOB (free on board) Korea on 27 May 2008.
Around the same period, toluene price jumped $240/tonne or 23% to $1,265-1,280/tonne FOB Korea in early June last year, according to global chemical market intelligence service ICIS pricing.
The slowdown in demand for aromatics is also expected to impact the supply-demand balance in this region, said a Singapore-based benzene trader, adding that it was uncertain whether producers would reduce operating rates of crackers and reformers.
Asia is a net exporter of benzene to the US, and exports toluene on a sporadic basis. On the other hand, Asia is an importer of mixed xylenes from the US.
Toluene and mixed xylenes are used as blending agents in gasoline production in the US and in some parts of Asia.
A sharp uptrend in Asian prices normally starts around the second quarter each year, tracking US aromatics, as the period is characterized by high gasoline demand. During this time, Americans tank up their cars for the summer driving season that spans the celebration of Memorial Day in late May and Labour Day in early September.
“This year the market is not so optimistic,” said a key southeast Asia-based trader of toluene and mixed xylene.
“We expect this year will be different from other years, and don’t expect much demand from the gasoline segment,” said a Japan-based toluene trader.
The slump in car sales and the rise in unemployment rate because of the global economic downturn will drive down demand for gasoline not just in the US but also in Asia, market sources said.
Gasoline demand in Asia usually kicks in during the August-September period when countries like Japan and South Korea have summer holidays, said a regional aromatics trader.
“Japan’s car sales are so slow, it dropped by about 32% in February this year, so how (can we) expect gasoline demand (to rise),” a southeast Asia-based trader said.
Consequently, price gains of benzene and toluene in this region would be limited in the second quarter of this year, traders said.
Last year, benzene prices shot up by $245/tonne (€194/tonne) or 22% from mid-April to $1,335-1,345/tonne FOB (free on board) Korea on 27 May 2008.
Around the same period, toluene price jumped $240/tonne or 23% to $1,265-1,280/tonne FOB Korea in early June last year, according to global chemical market intelligence service ICIS pricing.
The slowdown in demand for aromatics is also expected to impact the supply-demand balance in this region, said a Singapore-based benzene trader, adding that it was uncertain whether producers would reduce operating rates of crackers and reformers.
Asia is a net exporter of benzene to the US, and exports toluene on a sporadic basis. On the other hand, Asia is an importer of mixed xylenes from the US.
quoted from: www.ICIS.com
