US spot benzene plummets to two-year low, tracking sharp losses in crude

Source: ICIS News

2018/11/09

HOUSTON (ICIS)--US benzene spot prices plummeted to a two-year low following a sharp decline in oil prices along with slow demand for downstream styrene.

West Texas Intermediate (WTI) crude oil futures are down by nearly $15/bbl compared with the prior month, putting pressure on global aromatics prices.

Inventory levels remain long, while consumption is slowing with the weakness in styrene markets.

Current-month spot prices fell significantly, with the assessment in a wide range on a lack of confirmed deals for November business.

The contango in the benzene market widened from the prior week, with December trading at par to a premium of 5 cents/gal during the week.

The spread between spot benzene and spot toluene prices widened, while benzene traded at a discount to toluene for a fifth consecutive week.

Benzene has traded at a discount to toluene in nine of the past 10 weeks.

Operating margins for toluene disproportionation (TDP) units remain negative with feedstock toluene trading above benzene. Margins for selective toluene disproportionation (STDP) units remain favourable owing to persistently strong prices for paraxylene (PX).

STDP units convert toluene into benzene and a PX-rich stream of xylenes.

The spread between benzene and toluene provides a gauge to the profitability of on-purpose benzene production units such as TDP and STDP facilities.

US current month spot benzene prices were assessed at $2.13-2.42/gal DDP (delivered duty paid) for the week based on November bids and offers, compared with $2.465/gal DDP in the prior week.

ICIS assessed the Friday close for November benzene at $2.13-2.23/gal based on bids and offers, compared with $2.49-2.51/gal at last Friday’s close.

Major US benzene producers include ExxonMobil, Flint Hills Resources, LyondellBasell, Marathon Petroleum, Shell and Phillips 66.

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