2020 China Benzene Market to Fluctuate Widely
China’s benzene market is predicted to pick up in Q2, reach to peak in Q3 and go down in Q4. March will see the lowest price of RMB 4,800/mt, and September will witness the highest price of and RMB 5,950/mt.
China’s benzene market declined sharply after the Spring Festival holiday overall. The first round of declines: International crude oil prices slid sharply due to the public health event in China during the holiday. The second round of declines: Benzene price slumped by almost 20% to RMB 4,600/mt. During this phase, OPEC failed to reach an agreement in oil output production, so oil prices plunged, so Sinopec cut posted prices of oil-based benzene by RMB 600/mt to RMB 4,550/mt, and the benzene market tracked its downtrend.
March: In March, the benzene market is predicted to hit lows. There are three market drivers. First, the crude oil market will maintain its predicament. Second, with the opened Asia-China arbitrage window, CFR China negotiations gradually increase, and the port inventory will mount. Third, benzene operating loads at large-scaled units rise.
Q2: Entering Q2, with the weather getting warmer, the consumption peak season will come in the U.S. Besides, PX newly added capacity will weigh on the PX market and further affect the profits. Therefore, U.S. benzene producers will cut the operating rate of TDP units, which will be followed by declines in benzene output. In response, the U.S. will lift benzene import. Accordingly, more and more cargoes will flow into the U.S. for arbitrage, which will benefit China’s benzene market. H2 will see intensive commissioning of styrene, CPL and phenol units, so the demand for benzene will surge, which will likely push the benzene market up. Besides, in H2, the spread of coronavirus will be controlled, and low crude oil prices will not benefit Russia, Saudi Arab and the U.S. Therefore, crude oil market will rebound in H2.
Q3: Q3 is the traditional consumption peak season for the northern hemisphere, when the inventory of crude oil and refined oil will decline. Therefore, the crude oil market will be strong, if there are no big negative factors in Sino-U.S. trade. Against the backdrop, the benzene market is estimated to hit yearly highs in Q3.
Q4: In Q4, mostly newly added benzene units are predicted to be delayed to end-Q3 and Q4, when the benzene supply will increase. Meanwhile, most newly added styrene capacity will come online in end-Q3 and Q4. On the one hand, the demand for benzene will improve. On the other hand, when the styrene supply increases notably, styrene price will head down, which will further affect styrene operating rate and the demand for benzene. Therefore, the benzene market will be weighed on.
The following is the list of China newly added benzene capacity in 2020.
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