The global pure benzene market is expected to restore the balance of supply and demand in the second half of the year

Recently, the global market for pure benzene has been in short supply and prices have risen. Especially in the North American and European markets, the supply of pure benzene in the first half of this year is rarely tight, and the number of ships that can be used for pure benzene transportation is tight, and the shipment of Asian exports to Europe is blocked. At the same time, China's demand for pure benzene continued to be strong, and a large amount of US production capacity was temporarily interrupted by the extreme weather in mid-February. Affected by the above factors, the spot premium on the pure benzene market in the first half of this year was quite serious.

However, S&P Global Platts' recent analysis believes that the global pure benzene market is expected to restore the balance of supply and demand in the second half of the year. As far as the US market is concerned, data shows that South Korea’s exports of pure benzene to the United States have increased significantly recently. The amount of pure benzene shipped from South Korea to the United States from May 1 to 10 is equivalent to April’s level. Overtaking China to become South Korea's largest export market for pure benzene.

At the same time, with the easing of the covid-19 epidemic, the advancement of the covid-19 vaccination process, and the promotion of business opportunities in the summer to the production and operation of US companies, the domestic pure benzene production capacity in the United States is also expected to increase this summer. In Europe, ExxonMobil's chemical plant in Rotterdam, the Netherlands, is about to finish maintenance work and resume operations. Coupled with the increase in global freighter shipping, the balance of supply and demand in the European market will also be improved.

At the same time, the downstream demand of pure benzene market is expected to continue to maintain a strong growth trend. S&P Global Platts expects that downstream production such as styrene and phenol will maintain healthy development. The alleviation of the new crown epidemic will also drive European demand for pure benzene and derivatives to further increase. The analysis believes that due to strong demand, even if market supply and demand develop in a balanced way, the market price of pure benzene may still remain high.

It is worth noting that for some time, the high price of pure benzene in the Asian market has caused dissatisfaction among downstream manufacturers. Affected by the tight supply of pure benzene in the first half of the year, the price of pure benzene in Europe and the United States is generally higher than that in Asia. While a large amount of Asian production capacity is exported to Europe and the United States, local prices have also soared. From April to May this year, South Korea’s offshore benchmark price of pure benzene hit a seven-year high for several times.

In addition, the spot CFR spot selling price of pure benzene obtained by local buyers in Asia in the first half of this year was even nearly 10 times higher than the fixed-term contract price this year. Some buyers pointed out that the reason for the soaring price of pure benzene is actually more caused by markets outside of Asia, but it is really difficult to accept such a high premium for Asian buyers. However, many analysts believe that the soaring price of pure benzene in the first half of this year is only a product of specific market conditions at that time and is unlikely to last for a long time. The market will eventually return to rebalancing in the second half of this year.