Benzene Prices Continue to Move Up After the Spring Festival
Post-holiday, China’s benzene market had seen a good start, particularly in Shandong. The downstream industry maintained a moderate to high operating rate, while the operating loads of benzene and coal-based benzene slightly decreased, leading to local supply tightness that supported benzene prices. However, end demand recovery is slow and industries like styrene and CPL faced increasing profit losses.
The benzene sector and its major downstream industries, being part of the chemical industry, have stable unit operations and are less affected by the Spring Festival holiday. In contrast, further downstream sectors like GPPS, HIPS, and terminal products such as chemical fibers and plastic items saw more holiday-related shutdowns and reduced output. Consequently, post-holiday, benzene price showed strength due to its supply-demand dynamics, while most downstream products lag behind, pressured by growing losses.
Benzene and Its Downstream Sectors’ Operating Rates Around The Holiday
1. Benzene and coal-based benzene industries operated at lows.
Comparing the operating rates before and after the holiday, there is a slight downward trend in the upstream benzene and coal-based benzene industries. In the benzene sector, some local refineries in Shandong began to reduce or halt operation before the holiday, and the number of shutdowns for maintenance has continued to increase after the holiday, leading to a modest decline in the overall operating rate, expected to average 81.98% from last Friday to this Thursday. In the coal-based benzene industry, losses have mounted since January, with more shutdowns before the holiday and a reduced operating rate. Some units are resuming operations this week, which may lead to a slight increase in the industry’s operating rate, expected to average a slight increase to 58.93% this week.
2. Downstream sectors operated at medium-to-high levels.
According to SCI, the downstream industries’ operating rate has continued to maintain a moderate to high level, around 80.85%, with no significant change before and after the holiday. A slight increase in the overall load is expected this week. Among the downstream sectors, CPL and aniline are currently operating above 90%, while phenol and styrene are below 80%. Most downstream products are loss-making, and with the localized increase in benzene prices after the holiday, some companies are facing increasing losses. As of February 10, the immediate loss for non-integrated styrene units has reached RMB 588/mt, and the phenol industry’s losses exceed RMB 300/mt.
3. Benzene supply may continue to be tight in H1 2025.
Looking ahead, the upstream benzene sector is unlikely to see a significant increase in operating rates. After March, some large refineries have major maintenance plans, which are expected to lead to a continued decline in operating rates. In the downstream industry, high costs have already dampened the enthusiasm for operation in some plants. Given the ongoing strength of the benzene market, it is anticipated that some downstream sectors may reduce their operating rates in the next 2-3 weeks, leading to a slight decrease in the overall operating rate. However, comparing supply and demand, tight raw material supply is likely to be a long-term challenge for most downstream industries.
From the perspective of future industry upstream and downstream operating trends, the tight benzene supply situation is unlikely to be effectively alleviated in the short to medium term. Supported by this, the market price is expected to remain relatively strong, and the cost pressure in various downstream sectors may also not see significant relief in the first half of 2025.
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