US spot benzene prices plunge to 34-month low on supply length

Source: ICIS News

2018/12/07

HOUSTON (ICIS)--US spot benzene prices declined to reach a 34-month low as supply remains long while demand has been persistently sluggish. Refinery operating rates remain high, keeping benzene production rates high. On-purpose benzene production rates have been low as benzene continues to trade at a discount to toluene.

US benzene prices have fallen below spot prices in Asia and Europe, suggesting that US prices may need to rebalance with global trends to maintain sufficient supplies to the US.

The US is structurally short of benzene is dependent on imports to maintain sufficient supply to meet demand.

Spot benzene prices continue to trade at a discount to spot toluene, with the spread widening to a multi-year high. Toluene prices have traded at a premium to benzene for 13 of the last 14 weeks.

Margins for toluene disproportionation (TDP) units remain negative while margins for standard toluene disproportionation (STDP) units continue to weaken given the widening spread between benzene and toluene as well as recent decreases in spot prices for paraxylene (PX).

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

US current month spot benzene prices were assessed at $1.85/gal DDP (delivered duty paid) for the week based on December deals, compared to $2.00-2.08/gal DDP in the prior week. ICIS assessed the Friday close for December benzene at $1.85/gal based on bids and offers, compared with $2.05-2.07/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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