US spot benzene reaches record highs on tight supply, improved demand

HOUSTON (ICIS)–US spot benzene prices reached record highs this week, with two deals for the first ten days of July being concluded at $7.65/gal ($2,303/tonne) DDP USG on Tuesday.

Prices rose in response to ongoing supply tightness as high octane/low Reid Vapour Pressure (RVP) gasoline blendstocks remain in short supply, causing most reformate to be diverted to the gasoline pool and limiting operating rates at aromatics extraction units.

Demand has picked up as three styrene plants have restarted over the past few weeks, although the surge in benzene costs could pressure some derivative plants to reduce operating rates in the coming weeks, as the month on month jump in spot pricing indicates that contract could rise by a large amount for July.

August spot business is heavily backwardated from July, indicating that the market expects some supply relief by the end of July.

Although benzene spot prices are trading above toluene prices for the first time since March, toluene conversion economics remain poor amid strong demand for toluene from the gasoline pool.

Steam cracker production is also thin as heavy liquid feedstocks remain disadvantaged relative to natural gas liquids (NGLs).

June benzene was assessed at $6.50-6.75/gal DDP USG on the week ended 17 June while July benzene was assessed at $7.00-7.65/gal with the same terms.

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.