Benzene Price to Repair Slowly In April
China’s benzene price has been fluctuating within a small range in recent days. The highest level of RMB 8,575/mt, and the lowest point was RMB 8,425/mt.
The recent volatility of benzene prices was extremely limited, and the benzene market seemed to be in a stalemate again. We can still see some clues from the rolling annual average price. Looking back on March, China’s domestic benzene market price showed an N-shaped trend, which was basically the same as that of crude oil, but it had its own characteristics.
The unique feature is that the crude oil price difference was up to $30/bbl, with an amplitude of 30.61%. However, the price difference of benzene between the highest and the lowest was RMB1,100/mt, with an amplitude of only 14.01%.
March Benzene Price Comparison
From the market operation in March, the price difference between the spot price and the rolling annual average price at the end of February was about 1%, making room for subsequent price rise. Therefore, benzene prices began to repair slowly in the first week of March.
On the cost side, in April, the oil market may maintain the characteristics of high volatility, but the downward pressure is large. Negotiations in Eastern Europe have advanced smoothly, and the market expects that the situation will be difficult to continue to deteriorate. However, the crude oil export of a European country was interrupted, which continuously supporting the oil price under the tight supply and demand. Of course, the market has been paying attention to negative factors, such as the increased probability of reaching the nuclear agreement and the vague yield increase policy of the UAE, which have weakened the upward force of oil prices. Therefore, the oil price will fluctuate in April, and the volatility is still large. For the oil market in the next three months, although it is still at a high level, with the easing of the geographical situation and the increase of supply, the price focus is expected to gradually move down.
From the perspective of supply and demand, April is the month in which the maintenance of oil-based benzene units is more concentrated this year, and the output loss cause by maintenance is 170% higher than that in March. The output of oil-based benzene in April is expected to decrease by 0.39% compared with that in March. The output of coal-based benzene is expected to fall from highs in April due to the supply shortage of crude benzene and average profit. The output of coal-based benzene is expected to decrease by 6.51% compared with March.
From the representative downstream industries, the demand for benzene in the four major downstream industries is expected to increase by 1.69% in April.
By product, the demand from styrene industry is expected to increase by 5.40% after the restart of styrene maintenance unit and the commissioning of new units. The CPL producers reduce operating rates because of production losses, so the demand for benzene is expected to decrease by 6.73%. At present, the two downstream industries are in losses, so it is necessary to pay attention to the impact of load reduction on the overall demand for benzene.
However, from the absolute price of benzene, there is still room for recovery relative to crude oil price and rolling annual average price. In the short term, market participants need to focus on the acceptance of high-priced feedstock by downstream users.
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