Crude Benzene Price May Rebound in End 2022
As the end of the year approaches, the crude benzene price continued to decline. At present, coke enterprises are suffering from loss, and the supply of crude benzene is expected to increase limitedly. Meanwhile, the downstream coal-based benzene market is expected to raise operating rates in December, thus the crude benzene market is expected to have a short-term rebound before the Chinese New Year.
At the end of the third quarter of 2022, the crude benzene market began to decline under the influence of multiple negative effects such as crude oil and macro. By the end of November, taking Shandong market as an example, the mainstream price of crude benzene had dropped by RMB 1,620/mt to RMB 5,550/mt, a decrease of 22.6% compared with the middle of September.
In 2022, the overall profitability of domestic coke enterprises is weak. According to SCI, since the beginning of October 2022, the average loss of coke enterprises has been RMB 176/mt, an increase of RMB 84/mt compared with the third quarter, and an increase of RMB 68/mt compared with the same period last year.
Near the end of the year, the current macro improvement is not obvious. In addition, in winter, the overall operating rate at coke enterprises is expected to increase in a limited space. It is expected that the overall domestic crude benzene output will stay at a medium-to-low level from December to January 2023, with limited supply increment. This news has some good support for the crude benzene market.
After the National Day, the prices of crude benzene and coal-based benzene dropped significantly, but the prices of coal-based by-products remained relatively high, and the profitability of the coal-based benzene industry increased significantly compared with that before the National Day. At the same time, after late October, the number of maintenance enterprises in the coal-based benzene market increased. Although the industry profit was fair, the overall operating rate of the industry in November was not high, which also reduced the supply pressure of crude benzene to a certain extent.
Since December, the price of by-products of coal-based benzene is still at a relatively high level. It is expected that the early maintenance coal-based benzene units will be restarted in succession in December. In addition, considering the logistics impact, the restocking of goods before the double festival and other factors, it is expected that the domestic demand for crude benzene in December will be improved compared with November, which will give obvious positive support to the crude benzene price.
According to the monitoring data of SCI, the correlation coefficient of crude benzene and oil-based benzene in 2022 reached 0.89. Coal-based benzene shares the same downstream with oil-based benzene. However, the proportion of coal-based benzene in the whole benzene market has declined year by year in the past two years with the expansion of refining and chemical integration project. By 2022, the proportion of coal-based benzene has dropped to around 17%. Therefore, the price of crude benzene and coal-based benzene products is increasingly affected by the oil-based benzene price. It is expected that the arrival of imported oil-based benzene will stay at a high level in the fourth quarte. The port inventory in East China will showed a continuous rising trend after November. Therefore, the oil-based benzene market trend is still not optimistic in the short term, which also has a negative impact on the crude benzene market.
In combination with the above main factors affecting the crude benzene market, the negative impact of macro, crude oil and other related products may still affect the crude benzene market in the short term. It is estimated that there is still room for further decline in short-term prices. However, considering that the New Year Festivals are approaching, and the logistics in various regions are also generally affected to varying degrees, the procurement of downstream and terminal industries is expected to improve to some extent after the middle of December. Therefore, the crude benzene market is expected to see a rebound in the middle and late December.
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