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Benzene keeps increasing, fundamentals show signs of weakening

2021-01-11 09:09:23 CCFGroup

Asian benzene prices went up back from the New Year holiday, on the back of rising oil and downstream styrene prices. Bolstered by an output cut by Saudi Arabia, March Brent crude futures reached $54.3/b Jan 6. East China benzene rose by 130yuan/mt to 4,380yuan/mt, and styrene increased by 180yuan/mt to 6,530yuan/mt by Jan 6.

East China benzene and styrene markets continued the upward moves Thursday. Sinopec revised up benzene listed price by 150yuan/mt on Jan 7. After the adjustment, all marketing branches of Sinopec quoted up to 4,550yuan/mt. PetroChina raised listed price by 150yuan/mt to 4,600yuan/mt. FOB Korea benzene rose $20/mt on day on aggressive bid.



However, in fundamentals, overall benzene supply is expected to recover but demand is moderate as buyers become more cautious.

Asia paraxylene-naphtha price spread level jumped to around six-month high as PX prices continued increasing on firm buying interests for Feb cargoes. CFR China PX-CFR Japan naphtha spread reached high $180s/mt this week. In addition, toluene-naphtha spread and MX-naphtha spread widened to the highest level since the second quarter of 2020, back above the typical breakeven levels. Therefore, aromatics producers may increase operating rate of TDP and STDP units, which would also lift benzene output.

CNOOC Ningbo Zhongjin Petrochemical shut its 3.2 million mt/year reformer on November 26, 2020 for around 60 days of scheduled maintenance. Zhongjin may likely restart the plant around mid-Jan, ahead of its original schedule. The company could produce around 35kt benzene per month. Fuhaichuang plans to restart its 240kt/year benzene unit on Jan 25. The company's benzene output is around 24-27kt per month.

Benzene inventory decreased by around 12.2kt week on week to 203.8kt in East China ports on Jan 6, according to data released by CCFGroup. In mid-Jan, there would be around 65kt cargoes to arrive in East China ports.

In demand side, cash flows of styrene and phenol/acetone were in the negative territory, and some stand-alone producers may reduce output or shut down units due to poor margins.



In short term, benzene prices are likely to keep firm. Focus could be on crude oil, international benzene and downstream styrene prices.

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