Benzene Prices to Face Headwinds in Nov
In October, the prices of the benzene industry chain all fell except adipic acid.
The supply of oil-based benzene stayed stable. Meanwhile, coking enterprises saw profit gains and their operating rate increased, so the supply of crude benzene rose. The profit of coal-based benzene also recovered and the supply increment of coal-based benzene supply was larger than that of oil-based benzene.
The supply of adipic acid fell the most due to the tepid demand hindering the operating rate.
The supply of phenol increased the most, while the operating rate of the downstream BPA industry decreased, so the phenol price fell notably.
The supply of other downstream products all increased while prices dropped. However, as benzene price slid by 10.6%, the overall impact on downstream profit was limited.
Overall, the supply of benzene continued to rise and the price spread between styrene and benzene remained high at RMB 1,450-1,550/mt. The non-integrated styrene enterprises still enjoyed profits and the profit of other downstream sectors all improved from H1 2024.
In November, Trump’s election victory may have effect on the oil market a medium to long-term. On one hand, his support for traditional energy policies is expected to boost crude oil output, which is bearish for the crude oil market. On the other hand, if there is a deepening of sanctions against certain Middle Eastern and South American countries in the future, the crude oil supply may decrease, which may support the oil price.
In November, the output of benzene may stay stable MoM because some units may still be under turnaround. The import volume may remain over 400kt in November. However, there are no arbitrage opportunities emerging and buyers in the Asian market adopt a wait-and-see attitude for price increases.
In general, players adopt a bearish stance to the crude oil market in the medium to the long term and need to pay attention to the financial policies that will benefit the market. Additionally, in the absence of noticeable crude oil price fluctuation, the benzene industry may still be in loose supply, which could put downward pressure on prices. However, there are expectations for an improvement in the benzene supply-demand structure in December, which will benefit the benzene price.
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