US April benzene contracts drop over 50% on falling global crude values

HOUSTON (ICIS)–US April benzene contracts settled at $1.21/gal FOB (free on board), a drop of more than 50% from March, as global crude values continue to move spot prices lower.

The April decrease of 136 cents/gal ($409/tonne) puts contracts at their lowest level since settling at $1.01/gal in January 2009.

Spot prices dropped in March as the coronavirus (Covid-19) pandemic continues to push down global crude values. Benzene demand has also dropped off, reaching new lows during the same period.

Earlier on Tuesday, the European benzene April contract price settled at €171/tonne, a decrease of €424/tonne from March. The 70% drop established a new low.

US refinery operating rates are likely to face downward pressure in the coming weeks as demand for transportation fuels has fallen sharply amid the coronavirus outbreak.

Refineries are the major source of US benzene production.

US benzene contracts typically settle on the last working day of the prior month and are largely determined by the average spot price over the last 10 days of the month.

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

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

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