China's benzene import remains high in 2023

In recent years, China's dependency on benzene imports has increased due to the rapid expansion of downstream derivative capacities outpacing that of benzene.

Data from China Customs shows that in 2023, China imported 3.36 million tons of benzene, marking a 40kt increase from 2022. While this growth was modest, the total volume remains notably high.

This heightened level of imports can be attributed to favorable processing margins, the generally higher operational rates of units, and the closure of the Asia-America arbitrage window in the latter half of the year. Additionally, low inventory levels at Chinese ports played a significant role in attracting a substantial influx of benzene. The current supply and demand dynamics of benzene in China demonstrate a strong market with a heavy reliance on imports.

In 2023, there was no marked inverse correlation between the volume of benzene imports into China and its price. The scale of the import volume was more influenced by the price differential between imported and domestically produced benzene, rather than the absolute price.

In the year's first half, high benzene prices in Europe and America led to the diversion of some Asian benzene supplies. Nonetheless, with China's persistent demand growth, diminishing port inventories, and domestic prices surpassing international levels in the third and fourth quarters, there was a significant uptick in speculative demand. This trend was underpinned by steady domestic downstream demand and a decrease in European and American benzene demand, resulting in the redirection of surplus Asian benzene to the Chinese market.