US spot benzene-styrene spread enters negative territory

Adam Burkin

24-Feb-2020

HOUSTON (ICIS)–Benzene-styrene margins dropped amid increased US spot benzene values, further tightening margins for styrene production.

Benzene costs have steadily increased since November 2019 with crude rallying into January 2020, though values have subsided somewhat into late February 2020 as the coronavirus (Covid-19) outbreak in China has weighed heavily on global crude supplies.

US styrene market remains moved by soft derivative demand, global supply glut and a decline in margins due to increased benzene costs.

US benzene-styrene spread

The US spot benzene-styrene spread remained positive for the early part of 2020, but narrowed quickly as shown in the following chart.

ICIS Editorial Chart goes here

The spread between the two products provides a gauge to the profitability of styrene production. A wider spread suggests healthier margins for styrene producers and a narrower spread indicates compressed margins.

Margins entered negative territory, falling 4.31 cents/lb to -0.58 cents/lb since its latest peak in January, and are expected to remain tight unless benzene continues to drop due to global crude supply concerns.

Benzene is used to produce a number of intermediates that are used to create polymers, solvents and detergents.

Styrene is a chemical used to make latex and polystyrene resins, which in turn are used to make plastic packaging, disposable cups and insulation.

Major producers of US benzene include ExxonMobil, Marathon Petroleum, Shell, Flint Hills Resources, Chevron, CITGO, LyondellBasell, Valero and Total.

Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

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