Benzene is the blog's favourite leading indicator of chemical industry demand. It is one of the most widely used products and, as a liquid, it is also widely traded.
Its recent successes as an indicator include calling a peak on industry profitability, when its prices peaked a year ago. And then it provided early confirmation in October of the downturn, since when it has been at a sustained, and unprecedented, discount to naphtha.
But very recently, prices have begun to recover, with European benzene now trading around $575/t according to ICIS pricing, versus naphtha at $450/t. US benzene prices are at similar levels, around $1.85/gal. Asian levels are over $630/t. Thus benzene is once again trading at a healthy 'spread' to naphtha around the world.
This suggests that, finally, destocking down the value chains may be coming to an end. But the blog remains very cautious about whether this will then lead to a full-scale V-shaped recovery by the end of the year. The prudent policy is still to hope for recovery, but to plan for an extended downturn.