Benzene Prices May Fluctuate Limitedly in Short Term
Following late February, China’s benzene prices trended downwards. The Shandong market accelerated its downward trend. Concurrently, the North-South price spread rapidly narrowed. In the short to medium term, steady rigid demand may temporarily provide support to the market, while the impact of downstream unit maintenance in mid-to-late March on benzene prices requires close attention.
The benzene price dropped notably in late February.
Following a high-level fluctuation in early-mid February, China’s benzene prices trended downwards in late February. By February 28, the East China benchmark averaged RMB 7,450/mt, down 4.36% from mid-February’s peak of RMB 7,790/mt. Firstly, falling crude oil prices weakened cost support. Secondly, slow downstream demand recovery limited high-price acceptance. Thirdly, rising styrene inventory pressured benzene prices.
The north-south price spread narrowed.
Shandong benzene prices fell faster than East China, shrinking the regional price spread from RMB 295/mt (mid-Feb) to RMB 20/mt (Feb 28). Around the Spring Festival, the high demand for spot purchases from northern downstream plants and reduced operating rates at local refineries tightened the supply, supporting higher prices. However, the higher local prices attracted resources from East China and Northwest China to Shandong after the holiday, easing the local tight supply and weakening price support, leading to a rapid decline in late February.
The benzene price may fluctuate within a narrow range in the short term.
The price drop triggered a wave of buying. After a brief increase in market transactions, the pressure on sellers’ inventory eased, signaling a potential price rise. In the short term, the stable downstream demand for benzene and no significant increase in supply may provide some support for current prices, suggesting that the benzene market might fluctuate within a narrow range.
Looking at the medium to long term, from late March, several benzene downstream units in the north may undergo maintenance shutdowns. Meanwhile, the expected import supply remains concentrated over the next two months, so the port inventory may decline limitedly, which could put pressure on prices. However, the anticipated improvement in ABS, PS and EPS industries in March might offer some support for the styrene and benzene markets. Given these mixed signals, the benzene market may still face upward pressure in the medium to long term.
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