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Insight | Time:Dec 26 2017 2:33PM
Benzene market weakens in China, Sinopec cuts prices
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Benzene market moved down in China along with the drops in global market. East China benzene fell 275yuan/mt last week to 6,850yuan/mt Friday, and continued decreasing by 25yuan/mt Monday to 6,825yuan/mt ex-works.

Sinopec revised down benzene listed price by 200yuan/mt on Dec 26. After the adjustment, all subsidiaries quoted down to 6,900yuan/mt.

The drop was in line with falling global benzene prices and decreasing downstream styrene monomer price. In addition, some market participants sold for profit takings due to tightening money conditions before the year-end. The market shrug off the impact of falling inventory. East China styrene monomer fell 500yuan/mt last week to 10,000yuan/mt.

Asian market dropped sharply last week tracking global downtrend. USGC prices fell apparently due to muted buy interest ahead of the holiday season. Some spot allocation to the USGC was heard canceled in expectation of a fall in prices ahead, so China might be the only outlet to absorb the extra volumes.

However, with several Chinese downstream plants shut for turnaround, and a major benzene plant restarting after scheduled maintenance, some market participants concerned that stockpiling demand ahead of Chinese Lunar New Year might not rebound as expected at current prices. In addition, the current inventory level was still considered at high level. By last Wednesday, benzene inventory in East China main port was 139.8kt, according to CCFGroup's data.

In 2018, China's benzene capacity is expected to increase 2.74 million mt/year. Among the new capacities, CNOOC Huizhou plans to start the rest 250kt/year benzene unit and downstream 220kt/year phenol unit in Feb-Mar. Other units to start in Q1 are all with small capacities. Total downstream expansion is expected to be 3.61 million mt/year. Most units are likely to start in H2 or even Q4. Total benzene import demand will remain high.

In short term, eyes could rest on the progress of Qingdao Haiwan Chemical's new styrene monomer unit. Qingdao Haiwan Chemical started test run at its 500kt/year SM unit in mid-Dec 2017. The company plans to purchase benzene for production if the unit achieves products as expected, which might lend some support to benzene market.
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