Impact of Shanghai Petrochemical fire on benzene market

A fire broke out at 4:28 a.m. June 18, at the ethylene glycol plant of the chemical department of Sinopec Shanghai Petrochemical Co., Ltd., located in the city's Jinshan District.

The fire has been controlled around 9 a.m. The Shanghai Municipal Bureau of Ecology and Environment said the latest monitoring data show that the air quality has almost returned to normal, and no water pollution has been found in the surrounding rivers.

Due to the accident, Shanghai Petrochemical shut down the entire plant, including CDU, naphtha steam crackers, reformers, aromatics complex and other chemical units.

Shanghai Petrochemical has two crackers with ethylene capacity of 1.2 million mt/year, three reformers with processing ability of 2.5 million mt/year, two PX units with 1 million mt/year, benzene capacity of 550kt/year.

Among that, a 300kt/year PX unit has been shut for a long period before the accident, and the rest 700kt/year unit was shut due to the accident.

One reformer was shut in May for maintenance and has not restarted yet. The original benzene output plan for June was 250kt.

Sinopec Shanghai Petrochemical mainly supply benzene to Sinopec-Mitsui Chemical phenol unit, Gaoqiao Petrochemical phenol unit, Shanghai SECCO styrene unit via pipeline and a small amount to Baling Hengyi CPL unit.

Due to the shutdown of Shanghai PC benzene units, overall operating rate of benzene units decreased by 3.4% to 84.5%. The units are not damaged but shut down due for safety checks after the accident. The restart date has not been settled. It is unknown whether further safety checks will be carry out at other petrochemical plants.

In July, Sinopec is unlikely to restart Maoming PC cracker and Shanghai PC in July, with total loss of benzene output around 50kt. Coupled with 25kt loss due to turnaround of Fuhaichuang, total output loss could reach around 70-80kt in July.

However, with the startup of Sinopec Jiujiang Petrochemical, restarts of Yangzi Petrochemical and South Korea's SKGC, overall supply is expected to increase by around 110kt. In late June, around 35kt cargoes are expected to arrive in East China ports. Benzene port inventory is expected to increase.