Benzene Industry Chain Prices Drop the First Day of Post-Holiday Week
Highlights:
Feedstock prices witnessed larger declines.
Cost influence increased, while supply and demand structure remained stable.
The industry chain is anticipated to remain weak in the short term.
Benzene Industry Chain Price Changes Before and After National Day Holiday (Sep 29-Oct 6, 2023)
Benzene
Brent fell by $10.8/bbl over the National Day vacation, a decline of 11.32%. Asian benzene prices thereby descended, and the overall trading atmosphere in the Asia market was drained. On the first working day of the post-holiday week, China’s benzene prices also fell considerably, closing at RMB 7,795/mt, down by RMB 455/mt from the last working day (Sep 28) before the break. Many players held that the arrival of imported goods will probably be delayed, and some downstream units are expected to be newly added in the fourth quarter of 2023. Against this backdrop, the market appeared many bargain hunters. In the short term, benzene prices may still get some support.
Crude benzene
SCI anticipated that the crude benzene price may continue to see minor drops in the short term. Crude oil prices saw an accelerated drop during the National Day holiday, which dragged down oil-based and coal-based benzene prices. The market was heavily bearish, which had a negative impact on the crude benzene market as well. A high operating rate at coal-based benzene producers, which nonetheless provided some assistance to the market, allowed coking firms to sustain constant production while the spot supply of crude benzene remained somewhat constrained. Crude benzene prices will probably fluctuate within a narrow range.
Coal-based benzene
SCI reckons that the coal-based benzene market price may further drop due to fatigued crude oil and oil-based benzene markets. The industry's operating rate is anticipated to decrease due to the continued considerable profit loss experienced by coal-based benzene producers. The coal-based benzene market is still struggling overall. However, given the limited supply, the price decline might be limited.
Styrene
According to SCI, the price of styrene will be lower in the post-holiday week than in the prior week. As crude oil prices declined over the holiday, styrene producers in North China lowered the price of styrene. The sales, however, remained subdued. Styrene supply is expected to rise after the break, which will harm the market price. Although downstream industries are anticipated to increase operating rates, there will be no increase in supply as a result. Styrene supply variations should be monitored by market participants. Styrene prices may be able to rise in the future if styrene supply growth is minimal and unsustainable.
CPL
The CPL market expects a further decrease in the post-holiday week. The operating rate of the CPL industry has been raised from 68% before the holiday to 70% on the first working day of the post-holiday week, and may further rise in the later period, leading to an expectation for supply increment, which is bearish for the CPL market. Downstream PA6 producers had restocked their inventories before the break, so there were few new orders after the vacation. Moreover, the feedstock benzene market also experienced price declines weighed by falling crude oil prices. Based on the above factors, the CPL price will likely continue to slip.
Phenol
On the first trading day following the holiday, a small price adjustment occurred in the phenol market. The cost support for phenol deteriorated as a result of the drop in benzene prices. Furthermore, because of sluggish downstream procurement, many manufacturers purposefully ceded profits. However, the port inventory of phenol is still at a low ebb, and the downstream market continues to see rigid demand. Therefore, the further downward space for phenol prices may be limited.
Aniline
In the short run, aniline prices are expected to remain high. Following the significant drops in the price of crude oil and benzene over the holiday season, downstream users of aniline adopted a strong wait-and-see stance and did not actively purchase feedstock. As a result, aniline manufacturers saw a significant increase in their inventories. However, two sizable businesses in North China are planning maintenance for October, which is good news for the aniline market. Aniline prices are likely to remain high in the short term, but as the cost continues to drop, the risk of price drop could gradually increase.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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