The Price of Pure Benzene Fluctuates at A High Level, And the Profits of the Downstream Industry Chain Are Hit

Affected by the rising international crude oil prices and the growth of downstream demand, the price of pure benzene has soared.

According to data from Jinlianchuang, on June 10, the price of pure benzene rarely exceeded 10,000 yuan, reaching 10,300 CNY/ton. As of June 23, the market price (median price) of pure benzene in East China was 9,675 CNY/ton, while the market price on January 3 was 7,325 CNY/ton, an increase of 32%.

In an interview with a reporter from China Business News, Wang Qian, an analyst at Jinlianchuang Chemical, said that the price of pure benzene in the market continued to rise, causing great pressure on the downstream. Wang Qian believes that recently, the overall profitability of the downstream industry chain of pure benzene has been average. Although the loss of styrene and benzene maleic anhydride has improved, it is still difficult to make profits. Pressure increased.

High price volatility

Pure benzene is one of the most important basic organic chemical raw materials, mainly used in the manufacture of styrene, phenol, aniline, caprolactam, adipic acid, chlorinated benzene and other products, which can be used in synthetic rubber, plastics, fibers, detergents, The production of dyes, pharmaceuticals and other products has a wide range of downstream derivatives.

Since 2022, due to the impact of crude oil prices and tight market supply, the price of pure benzene has been rising all the way, showing a positive trend as a whole.

Taking the market price in East China as an example, the monitoring data of Jinlianchuang showed that the low point of pure benzene price in East China was 7,325 CNY/ton on January 3, and the high point was 10,300 CNY/ton on June 10, an increase of 40%. . On June 10, the price of pure benzene of Sinopec was raised again by 300 CNY/ton, and the implementation was 10,000 CNY/ton. The refineries along the river and coastal areas uniformly implemented this price.

As for the reasons for the rise in the price of pure benzene, Wang Qian told reporters that the situation in Ukraine and international energy tensions have led to the continued sharp rise in crude oil prices. The development of large refining and chemical enterprises and the expansion of downstream capacity have made my country's pure benzene in terms of supply and demand and market trends. Affected by the decline of the international pure benzene market, the market trend and the overall operation direction of the industrial chain have strong autonomy, and changes in domestic fundamentals have a strong directional effect on the operation of the industry. At the same time, with the release of new downstream production capacity, the market demand for pure benzene has increased.

According to Hengli Futures data, the newly added capacity of pure benzene in 2022 is limited. As of now, only 440,000 tons of new capacity of Zhenhai Refinery and other units have been added. At the same time, there are many new projects in the downstream of pure benzene, and the production capacity of styrene alone has increased by 2.39 million tons this year. The supply and demand situation of pure benzene continued to be tight, resulting in a new low in inventory.

At the same time, the business agency analyzed on June 11 that due to the high international price, the import of pure benzene in East China ports decreased, and the inventory continued to drop to 48,000 tons. The shortage of deliverable inventory led to a strong short squeeze, and prices in some parts of East China continued to rise. In the early stage of the main refinery, due to production cost factors, the production of pure benzene decreased, and the price continued to rise. Boosted by multiple positives, the price of pure benzene exceeded 10,000 yuan per ton.

Downstream industry chain is under pressure

However, the Asian pure benzene market has recently retreated and fell. As crude oil prices closed down, and downstream centralized maintenance was superimposed, the demand side support weakened, and the pure benzene market fell rapidly.

According to data from Jinlianchuang, on June 17, the negotiated price of pure benzene in the market fell by about 500~650 CNY/ton compared with last week. As of June 17, the negotiated price in East China was 9650~9700 CNY/ton, and the mainstream negotiation in North China The price is 9300~9600 CNY/ton, and the downstream purchase intention price is 9400 CNY/ton, and the market is expected to increase the downward adjustment of the listed price of pure benzene.

The market price of pure benzene fluctuated at a high level, which squeezed the profit space of the downstream, and some companies even suffered losses.

Wang Qian analyzed that although the current domestic price of pure benzene has been adjusted, the overall profitability of the downstream industry chain is average. Although the loss of styrene and benzene maleic anhydride has been improved, it is still difficult to make a profit. Caprolactam and phenol ketone also maintain a loss-making state, and the pressure on production costs of enterprises has increased greatly. Although aniline and adipic acid are operating at low profit, the overall operating conditions are average. Some styrene plants were shut down, resulting in a drop in the operating rate, so the demand for pure benzene in the downstream market has not increased.

Take the downstream phenol ketone as an example. From January to May 2022, the theoretical cost of the domestic phenol ketone factory will increase significantly, but the downstream cannot keep up with the rising cost, and the theoretical gross profit of the phenol ketone factory will be squeezed. According to the monitoring of Zhuochuang Information, from January to May, the average theoretical costs of phenol and ketone factories were 12,408 CNY/ton, 12,958 CNY/ton, 13,778 CNY/ton, 13,543 CNY/ton, and 14,171 CNY/ton. The average theoretical gross profit of phenol and ketone factories is 1992 CNY/ton, 1923 CNY/ton, 779 CNY/ton, 121 CNY/ton, -167 CNY/ton, and the gross profit gradually turns from positive to negative.

The profits of the phenol and ketone industry have suffered serious losses, and its leading company, Weiyuan (600955.SH), has been the first to bear the brunt. According to the quarterly report of Weiyuan shares in the first quarter of 2022, the company's main income was 1.977 billion yuan, down 12.18% year-on-year; the net profit attributable to the parent was 304 million yuan, down 48.59% year-on-year.

Weiyuan shares said that the company purchased bulk chemical raw materials pure benzene and propylene to produce phenol, acetone, bisphenol A, and polycarbonate. The decline in performance was mainly due to the overhaul of equipment and the increase in the prices of some raw materials.

Wang Qian said that as the downstream production capacity of pure benzene continues to expand, but the terminal demand has not yet followed up, there are many problems in market price transmission, which makes the profit of the pure benzene industry chain gradually shift from the downstream to the upstream.

Wang Qian said that, on the whole, contract sales have guaranteed the profits of pure benzene enterprises to a certain extent. And as the industrial chain of styrene, phenol ketone, adipic acid and other products continues to expand, the downstream demand for pure benzene will continue to grow steadily. However, in terms of new downstream production capacity and production areas, North China is still the main gathering place for new downstream projects. At that time, the supply of goods in the North China market will become more popular, and at the same time, its influence on the market will increase.

In Wang Qian's view, the ups and downs of crude oil are disorderly, which aggravates the operational risks of the pure benzene market. With the later production of Shenghong's aromatics plant, the supply of pure benzene will be increased in a short period of time, and the market supply and demand pattern may be adjusted.

Decrease in external dependence

With the rapid development of the refining and chemical industry and the continuous maturity of technology, the production capacity of pure benzene in my country has increased significantly, and the demand has continued to rise.

According to the research report of Shengang Securities, from 2020 to 2022, the growth rate of downstream demand for pure benzene will reach 20%, 21% and 10% respectively. In contrast, the growth rate of pure benzene production capacity was only 4.09%, 14.38%, and 4.1%, respectively, and the gap continued to expand.

It can be seen that my country's pure benzene industry is in a state of tight supply. At the same time, due to the continuous expansion of the supply and demand gap in the pure benzene industry, the dependence on imports is also high.

However, Wang Qian said that at present, domestic pure benzene presents a market situation of high output, independent control and strong demand. The dependence on imports has shown an overall downward trend in recent years, and there are more downstream capacity expansions, especially for styrene. The expansion of capacity has made the impact on the demand side stronger than in previous years.

According to customs data, in 2020, my country's imports of pure benzene will be 2,097,878 tons, a year-on-year increase of 8.2%, and the export volume will be 3,054 tons, a year-on-year decrease of 91.5%. The largest importing country is South Korea with 1,039,112 tons, accounting for 49.53% of the total import volume; followed by Thailand with 270,491 tons, accounting for 17.89% of the total import volume; and Brunei with 154,385 tons, accounting for 7.36% of the total import volume.

According to statistics, in May 2022, my country's monthly imports of pure benzene were 212,500 tons, and the cumulative import volume was 1,392,800 tons. In that month, the import value was 254,249,642 US dollars, the average import price was 1196.709 US dollars / ton, the import volume decreased by 21.09% month-on-month, and the import volume increased by 8.90% year-on-year. As of May 2022, my country's cumulative imports of pure benzene have increased by 31.51% over the same period last year. In May, crude oil continued to rise, and international prices continued to rise driven by the strong demand for crude oil in the United States. Affected by factors such as high import costs and transportation cycles, my country's imports in May fell sharply.

Wang Qian said that from the perspective of domestic fundamentals in 2022, domestic production capacity is still rising, mainly concentrated in large refining and chemical enterprises. The price of domestic enterprises is better than that of foreign companies. The expansion of downstream capacity makes the supply and demand side have a certain balance. However, the rapid expansion of downstream production capacity has increased the influence of the downstream demand side year by year. Among them, the products with more downstream capacity expansion are styrene and caprolactam, and the later capacity expansion of adipic acid and phenol ketone has gradually increased.

In 2022, the new capacity of pure benzene in the world will be mainly concentrated in China. According to statistics from Huarui Petrochemical Information Network, the domestic new plant for pure benzene is planned to be about 3.3 million tons, and most of these new capacity are mainly integrated refining and chemical plants. For example, Shenghong Refinery has 16 million tons of oil refining, and is expected to produce 1.1 million tons of pure benzene, with 450,000 tons of styrene and 650,000 tons of phenolic ketones downstream; Guangdong Petrochemical has 20 million tons of oil refining and is expected to produce 800,000 tons of pure benzene. The downstream supporting styrene is 800,000 tons, and the monthly sales of pure benzene is only 10,000 tons.

Wang Qian believes that although the demand for pure benzene increases due to the rapid expansion of downstream production capacity, it is still necessary to be alert to the impact of downstream production capacity expansion on the industrial chain. If the supply and demand markets are not fully matched, the rapid downstream expansion may have a negative impact on the price of pure benzene. to suppress.