North American prices for benzene will remain volatile as the region continues to take a step back in production of the chemical, the CEO of US-based Huntsman said on 31 March.
“We were so heavily dependent on the heavy steam crackers, and they’re all being converted over [to ethane crackers],” said Peter Huntsman on the sidelines of the International Petrochemical Conference (IPC), run by the American Fuel & Petrochemical Manufacturers (AFPM).
“Even if the economics get very, very attractive for benzene here, it’s not like these ethane plants are going to somehow magically start producing benzene here. We’re fundamentally getting out of the benzene business here in North America,” he added.
Benzene and other aromatics production is decreasing in the US in the wake of the shale gas boom making cracking of lighter feeds such as ethane more economically attractive than cracking naphtha. The lighter feeds produce much less aromatics than naphtha.
The US benzene contract price fluctuated in the $4-5/lb range in 2013 and early this year. Meanwhile, US benzene spot prices began 2014 establishing record highs on the back of short-cover positions. The short-cover positions led the benzene spot market to trade at all-time highs of $5.50/gal in mid-January, surpassing the previous high of $5.35/gal in October 2012.
High benzene prices will attract exports from Asia and Europe that will flood the market and cause prices to collapse, Peter Huntsman said. He believes that vacillation will be typical of the US benzene market for years to come. “By and large, [the US benzene market is] going to be volatile, and structurally it’s going to be short,” he said.