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APLA: Views mixed on US benzene impact if China taxes styrene imports

Rio de Janeiro (Platts)--14 Nov 2017 247 pm EST/1947 GMT


There were mixed views on the sidelines of the 37th annual Americas Petrochemical Meeting in Rio de Janeiro on how US benzene would be impacted if China imposes taxes on imports of US benzene derivative styrene.

The US typically imports benzene from South Korea because of net short production and produces and exports a large amount of styrene. China also imports benzene from South Korea to make up for the production shortage there.

While an investigation of dumping of styrene into China has been ongoing during the third and fourth quarters, market participants have been conscious of what this would do to that typical trend. Most US participants remain skeptical that taxes would be large enough to impact trade flows.

If there's a lower amount of styrene going to China, benzene prices could move lower as China's need for US styrene is a deciding factor in US styrene demand, sources said.

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Although this has been an atypical year for benzene as lower imports have been offset by an excess of feedstock pygas and higher benzene production from refineries, the US needs up to an additional 120,000-140,000 mt of imports monthly to satisfy the production shortage, according to market feedback.

In a different view point, those taxes could mean lower US benzene imports, and prices could rise as a result, sources said. The US would still need to import benzene, but taxing US styrene imports might mean less benzene to the US as Korea would need to send more benzene to China, sources said.

"If China taxes US styrene imports, this could ultimately mean higher benzene pricing because of a lower flow of benzene to the US," a source said. "China could see a larger amount of benzene imports from Korea."

Market participants expect there to be more details on whether China will impose taxes on styrene imports from the US by the beginning of 2018.

--John Calton, john.calton@spglobal.com

--Edited by Annie Siebert, ann.siebert@spglobal.com




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