Benzene Market Trends and Future Outlook

Benzene prices experienced a significant decline on Monday, following the downward trend in downstream styrene monomers. East China benzene dropped by $22/mt compared to last Friday, settling at $1210/mt at the close of Monday in the Chinese region. Read on to learn more about the factors influencing the benzene market as a whole. 

Factors Influencing Benzene Prices

1. Operational Resumptions

ZPC’s reformers restarted aromatics, and Hengli TDP units and other reformers also resumed operations this week. Conversely, Fuhai planned a shutdown, indicating limited changes in its benzene operations.

 2. Demand Dynamics

On the demand side, CPL/adipic acid, styrene, and aniline units have increased their operating rates, supporting downstream processing margins.

3. Destocking Phase

As of May, the benzene market is experiencing a destocking phase, as refineries in China undergo extensive maintenance, leading it toward the highest level of benzene supply reduction for the year.

Market Outlook for Benzene

Benzene Supply Forecast

Despite maintenance reductions, the longer days in May are expected to boost benzene supply by approximately 80kt. However, maintenance-induced losses are anticipated on the demand side.

Benzene Price Movement

Benzene prices are currently at a peak, creating resistance to further increases. With an expected return of more benzene supply in June and considering the profit levels of downstream units further, upward price movements are likely to be limited.

Influence of Styrene Prices on Benzene

The market should closely monitor crude oil and other aromatics’ prices, particularly the influence of downstream styrene prices. Styrene units restarting towards the end of May might increase production, potentially lowering benzene prices.

Benzene Demand Trends

Despite the overall high prices, demand for benzene in May is showing signs of an increase. A narrowing price difference between styrene and benzene is highly probable, with benzene units returning online from maintenance in June.

Benzene Operating Rate Trends in China

The operating rate of China’s benzene hydrogenation unit hit a new low within the year, standing at 55.77% by May 9. This decrease is attributed to enterprises shutting down their units amid increasing profit loss due to high crude benzol prices.

OFB’s Insight on the Benzene Market

While benzene prices are currently at a high, several factors, including operational resumptions, demand dynamics, and supply forecasts, will influence future price movements. Monitoring market trends and operational rates will be crucial for stakeholders to make informed decisions in the benzene market.

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