China's April benzene import hits a record high

China's April 2021 benzene import hiked by 193.3kt or 99.9% month on month and was 212.8kt or 122.3% higher year on year to 386.8kt, latest data from China Customs showed. April figure was at a historical high of China's benzene imports. 

Among that, import from South Korea was 184kt, up around 83.3% from 101kt in March, and from Brunei up 89.8% to 56.7kt. Import Kuwait was seen in April at 33kt, while in the first quarter, there were no imports from Kuwait. Imports from some other countries and regions also increased in April. 

The sharp increase was mainly due to the opened arbitrage window from other markets previously, particularly from South Korea. In late February and March, due to the price gap and weakening demand in the US due to the cold snap, more Asian benzene find its way to Chinese market. 

In addition, more benzene units were under maintenance in April, compared with in the first quarter of 2021. China domestic benzene output was expected to be lower than in March. In May, benzene units gradually restarted and output was expected to increase. 

Benzene downstream demand remained healthy, which could also be reflected in the persistent low inventories in both East China ports, producers and downstream plants. By the third week of May, benzene inventory was around 112.5kt.

In April, East China prices were mainly lower than imported prices. Meanwhile, more Korea-origin cargoes were heard shipped to the U.S. market. China's May benzene import will drop apparently from the record high in April. 

U.S. benzene inventory was heard increased with the previous procurement and rising refining rate. Benzene demand for imports gradually weakened. Forward-month FOB Korea-USGC benzene spread narrowed and Asian benzene would again find its way to China. 

With the Korea-US arbitrage window closed, FOB Korea benzene prices decrease and the arbitrage window for June and July to Chinese market opened. In addition, CFR China prices on RMB parity was still lower than Sinopec's listed price, which also indicated tightness of Sinopec. China's benzene imports are expected to recover in June and July. Total benzene inventory level in China may increase in July.