China Benzene Market Trended Down amid Sluggish Demand

SCI99

2020-02-25

导读：China Benzene Market Trended Down amid Sluggish DemanM

China Benzene Market Trended Down amid Sluggish Deman

More and more petrochemical companies resumed operation recently. Accordingly, with demand for crude oil picking up, the international crude oil market increased for seven consecutive trading days, with prices rising to a high over three weeks. By comparison, China’s benzene market failed to hike, with mainstream negotiation prices keeping slipping.

Market price:

Tracing sharp declines in crude oil prices during the Spring Festival holiday, China’s benzene market maintained a downtrend after the holiday, with prices declining by 3.57% to RMB 5,675/mt. As of February 20, benzene East China market prices closed at RMB 5,535/mt, down 1.16% W-O-W and up 12.16% Y-O-Y.

The price spread between East China and Shandong was widened. On the one hand, restricted by the transportation, it was difficult for benzene in the northern area to flow into East China. Besides, continuously low inventory at main ports of East China buoyed the market somewhat. On the other hand, the benzene supply in the northern area was sufficient. Moreover, some downstream enterprises shut units down or cut the operating loads, with supply glut seen.

Market supply:

The decrease in the demand for refined oil greatly affected the operating loads of refineries. Against the background, Shandong independent refineries successively cut their operating loads, and the low level would continue.

Taking Shandong independent refineries as an example, on February 5, 2 refineries ran at full loads, and 6 refineries shut units down. However, on February 20, no refineries ran at full loads, and 9 refineries were offline, with the capacity taking up 30.23% of the total.

State-owned refineries mainly cut the operating loads of 20%-30%, and they mainly consumed previous inventory.

Market demand:

Benzene downstream enterprises kept cutting their operating loads, in reaction to dull demand from end-users and low profits. Moreover, the declines in the operating loads in downstream industries were much larger than those in the benzene industry. Therefore, the supply-demand contradiction was worsened.

On February 19, the benzene inventory at trades at main ports of East China stood at 71kt, down 0.5kt or 0.7% from that on February 12 and down 68.86% Y-O-Y. With local governments successively introducing policies, the transportation issue will be alleviated.

Market forecast:

Downstream enterprises’ restarting time will play a vital role in the coming benzene market.

The benzene supply in East China remains low. The supply in the Asian market will keep tight, as the Asia-U.S. arbitrage window is open and March will see a round of unit turnarounds in Japan and South Korea, which will buoy the benzene market somewhat. Meanwhile, the public climate and profitability will greatly affect downstream operation.

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