27 December 2011 17:30 [Source: ICIS news]
By Brian Balboa
HOUSTON (ICIS)--Most US benzene market participants do not expect to see a drop in demand for the first quarter of 2012 because year-end destocking will be over.
This is also in line with preparing for demand from gasoline blenders ahead of driving season.
Beyond the first quarter, most market participants had little visibility, a source said.
One benzene trader said that demand will be more a function of gross domestic product.“The global economic situation is something we debate back and forth,” a benzene producer said. “But the benzene market is going to get off to a good start.”
“Everyone is wary of the global economy,” said one US benzene broker. “But that’s not going to get sorted out anytime soon." As long as the economy does not crash, benzene should have some support.
In addition to the economy, market participants will also be keeping close watch on inventory levels as refining capacity is reduced, the benzene trader said.
In the northeastern US, Sunoco took its 165,000 tonne/year benzene unit off line at its Marcus Hook refinery in Pennsylvania, along with the rest of its 178,000 bbl/day refinery.
“Benzene supply will be more restricted from lighter feeds and less refining capacity,” the benzene trader said.
However the Mobile Source Air Toxic (MSAT) II regulations set by the US Environmental Protection Agency (EPA) this year, has ensured that benzene supply in the US would rise, which market participants said earlier in the year would impact exports from Asia to the US.
That scenario has played out in the second half of 2011, as inventory levels have increased, according to NPRA data, and prices have come down on weaker demand and less imports, trade sources said.
In addition to the ample supply, benzene prices came down alongside weak demand in the downstream styrene market, where supply positions were also long.
For more on benzene visit ICIS chemical intelligence
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