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    Home > Chemicals Industry > China Chemical > European and American benzene supply will return to normal in the second half of the year to ease the imbalance between supply and demand

    European and American benzene supply will return to normal in the second half of the year to ease the imbalance between supply and demand

    • Last Update: 2021-06-05
    • Source: Internet
    • Author: User
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    After uncharacteristically tense in the first half of the year, the supply of benzene in the United States and Europe is expected to return to normal in the second half of 2021, thereby alleviating the demand for Asian goods.


    In the United States, in addition to the winter storm in mid-February that destroyed more than 4.


    6 million barrels per day of refinery capacity in Texas and Louisiana, limited imports from South Korea and substandard refinery operating rates also suppressed U.



    Supply disruptions in the United States and limited materials in Asia disrupted transportation to Europe, while the rapidly lagging market, strong Chinese demand and limited ship supply further restricted Asia’s exports to Europe and the United States in the first half of 2021.


    However, as market downturns ease around the summer and global supplies increase, European benzene consumers are expected to have more products arriving in Europe to make up for the gap.


    After the maintenance of ExxonMobil Chemical's Botlek plant in Rotterdam, the Netherlands, it resumed production, and the shortage is expected to be alleviated.


    As South Korean benzene cargoes begin to arrive in the US Gulf in large quantities, the US supply will increase around July.


    According to KITA data, the amount of benzene shipped from South Korea to the coast of the United States from May 1 to 10 is roughly the same as that of the entire April.



    Sources said that domestic production in the United States is also expected to increase.


    New crown vaccination and improved demand for summer travel and air travel have prompted US refineries to increase the production of gasoline, aviation fuel and middle distillates.



    Due to the astonishing profit rate of benzene in the first half of the year, Asian producers are operating at a high speed in order to maximize profits, leading to an increase in exports from Asian countries.


    From January to April, the Asian benzene-naphtha price gap averaged US$240/ton, and it hit a high of US$475/ton in mid-April.



    In contrast, the average price difference between p-xylene and naphtha in January-April was US$224/ton, and manufacturers will shift their focus to the production and sales of benzene.


    Sources said that with the gradual recovery of supply, profit margins in Asia are still uncertain in the second half of the year, and benzene may maintain its advantage in the first half of the year.


    Platts Analysis wrote in an April report: "The recovery of local demand in Western countries may accelerate rapidly in the next six months.


    They predict that the net utilization rate of refineries may reach about 95% in the middle of the summer.



    However, market participants are not sure whether this increase will be enough to suppress prices when demand in the downstream value chains of benzene is strong and the US manufacturing industry is recovering strongly.


    Styrene producers are not expected to significantly reduce prices, and there are no SM devices planned to be overhauled in the United States for the remainder of 2021.



    Downstream demand remains healthy


    The demand for downstream products such as styrene and phenol is expected to remain healthy.


    The reduction in COVID-19 cases and the progress of the vaccination program provide a glimmer of hope for alleviating the blockade across Europe, while supporting further demand for benzene and its derivatives.
    The increase in car travel in the summer also means that refineries may increase the production of road fuels and increase the supply of benzene raw materials.



      A source said that the actual demand for styrene is expected to be stronger in the second half of the year, but the reduction in imports of SM from the United States may put pressure on benzene prices.


      A trader said: "The increase in styrene production capacity in Asia will have a huge boost to benzene.


    "


      By 2021, China's downstream new capacity has been delayed and started simultaneously, which has increased the demand for benzene, especially in southern China where commercial storage is not widely used.


    At the same time, China’s integrated refineries have an oversupply of benzene, and the start of the styrene plants at these refineries has been postponed to 2022.


      Previously, due to the sale of goods outside Asia, the availability of goods for Asian buyers decreased, and end users in Asia were dissatisfied with the sharp increase in prices.
    FOB Korea’s benchmark price in April and May hit a seven-year high several times.


      There is a big gap between the bids and quotations in the CFR Asian market.
    Sellers are considering global delivery prices.
    The spot quotations of CFR Asian buyers are almost 10 times higher than the 2021 fixed-term contract benzene price.


      A buyer said: “It is difficult for Asian buyers to tolerate a significant increase in costs caused by reasons unrelated to Asia.
    The entire styrene chain will eventually be normalized in the second half of the year.
    ” Many sources said that the situation in the first half of the year was intermittent.
    Sexuality is unlikely to become the norm in the future.


      Transfer from: China Plastics Online

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