China domestic benzene market continued its upward move this week, with East China marker up 200yuan/mt day on day to 7,100yuan/mt Monday, the highest level since late November of 2014.
China's biggest benzene producer-China Petroleum & Chemical Corporation, or Sinopec Corp, revised up benzene listed prices by 300yuan/mt to 6,900yuan/mt on December 5. Sinopec had just raised the listed prices by 200yuan/mt on December 3.
In November, Sinopec raised its benzene listed prices five times by 800yuan/mt in total. The company settled November benzene contract price at 5553yuan/mt, up 253yuan/mt from its October's settlement.
Market participants mainly attributed the price hike to tight spot availability. Domestic benzene production was around 680kt in November, down 3.5% month on month. Tank inventory in East China main ports kept decreasing since end October. Meanwhile, some cargoes in tank were held by plants, so the availability was prominently tight. By November 30, tank inventory in East China main ports was only about 41.8kt, much lower than the normal level of 80-10kt.
The surge in downstream styrene monomer also lent strong support to the market. East China SM surged in November, with monthly average price hiking 1501.54yuan/mt or 17.89% from October. Operating rate also increased on improving margins. By December 2, styrene monomer plant operating rate was 84%, and the cash flow was about 1135yuan/mt based on spot price. The demand could also be seen from new downstream plans. Jiangsu Abel Chemical bought benzene and ethylene in November for the test run at its 250kt/year styrene monomer production line. Coupled with high operating rate and good margins of caprolactam, market participants also expected import demand to remain firm.
Another supportive factor was the surge in crude oil, which hiked around 9% in earlier December on OPEC output deal. The strong momentums in crude oil and downstream styrene monomer, as well as the tightness in benzene supply, will continue to support benzene market. But the upward room might be also limited as some downstream players could not accept such high prices.