Benzene Prices May Rebound Before the Spring Festival
In late December, the benzene price dropped noticeably due to the accumulated inventory and reduced downstream demand. As of December 31, the negotiation range of benzene price was RMB 7,030-7,100/mt, which dropped to a periodic low. As the Spring Festival approaches, the benzene price may rebound due to some positive factors. However, the benzene market may be lackluster in the middle to long term.
In early-to-mid December, the benzene price started to drop after fluctuating. The decrement was noticeable in late December. As of December 31, the average benzene price dropped to RMB 7,065/mt, down RMB 435/mt or 5.8% from early December. Firstly, the benzene inventory continued to rise under the situation of no arbitrage opportunity between Asia and America. Secondly, some of the downstream industries, especially industries in the northern region cut their operating load notably. The decrease in rigid demand dragged down the benzene price. In addition, styrene prices fluctuated downwards in December, which also had a bad effect on benzene prices. The benzene price continued to drop in December due to the above factors.
The passable demand in Jan may boost benzene prices.
As the Spring Festival approaches, some maintenance units will be restarted, so the demand for benzene may rise. According to SCI, the downstream consumption volume for benzene in January 2025 may be attached to 2,790kt, up by 5.28% MoM. The increase is mainly due to the new styrene unit and the restart of aniline and adipic acid units. In addition, many downstream industries may maintain normal operation before the Spring Festival, the restocking demand may boost the benzene price.
The rising benzene inventory may drag down the benzene price in the short to middle term.
According to SCI, the benzene inventory at East China’s port was 183kt on December 25, 2024, up 50.49% YoY. Since August 2024, China’s monthly benzene imports have exceeded 400kt for four consecutive months. According to customs data, the cumulative import of benzene from January to November 2024 reached 3,795.6kt, up 24.55% YoY, setting a new annual import record. With the continuous closure of the Asia-America arbitrage window, a large influx of South Korean and Southeast Asian supply has entered the Chinese market. However, demand growth has not kept pace with supply growth, leading to sustained pressure on the benzene market in the second half of 2024. Recently, port inventory has approached 200kt, heightening market concerns and pushing prices into a rapid decline. For January 2025, with no signs of the Asia-America arbitrage window opening, monthly benzene imports are expected to remain high, and continued accumulation of port inventory may maintain downward pressure on benzene prices.
The benzene price may rebound in the short term.
The domestic mainstream market price for benzene has approached its annual low. For example, the low point was observed on October 29, 2024, in East China, where the average market price was RMB 7,105/mt. The current low price and the approaching Spring Festival holiday suggest that downstream factories, especially in northern regions, still have a certain demand for stockpiling. This short-term demand may provide a positive stimulus to benzene prices in January, potentially leading to a market price rebound from low levels. However, in the medium to long term, with high port inventory levels and uncertain recovery of downstream demand in February after the Spring Festival, the benzene market is likely to remain under pressure.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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