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Insight | Time:Mar 27 2018 2:26PM
China's benzene market to continue its weakness
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China's benzene market kept moving downward since end February. The market was fundamentally weak, and the volatility in crude oil had limited support to benzene prices. Global benzene demand was weak, particularly in China. The decline in China also exerted downward pressure on FOB Korea market, as the arbitrage window from Northeast Asia to the U.S. Golf Coast was closed.

Overall demand for benzene slowed down after Chinese New Year holiday due to intensive turnarounds in downstream derivatives. Sinopec had slashed listed prices by several times, which heavily weighed on market sentiment. On March 26, Sinopec cut benzene listed price by 300yuan/mt to 6,050yuan/mt ex-works. More players chose to step aside to observe the market.

Some downstream units had restarted. However, market confidence revered slowly as some units were also planned to undertake turnarounds in Apr. Qigndao Haiwan Chemical postponed turnarounds at its 500kt/year SM unit to early Apr. The turnaround was expected to last for around 10-15 days. Jiangsu Shuangliang Leasty Chemical planned to shut its 210kt/year SM line from end March for around one month of turnaround. Tianjin Dagu Chemical plans to shut its 500kt/year SM unit in end April for around 20 days of turnaround.

While benzene supply remained ample. Chembroad, CSPC were expected to get benzene in early April. High inventory level in East China main ports also weighed on the market. Benzene inventory increased since early January, and by March 21, the figure was around 183kt, according to data released by CCFGroup.

*CCFGroup publish benzene inventory in East China ports (mainly in Taizhou, Changzhou, Jiangyin) every Wednesday. The figure reflects the inventory level held by traders.

In other factors, downstream styrene monomer prices dropped sharply in March, for both physical materials and contracts in Huaxicun Commodity Contracts Exchange. HXCCE SM fell apparently along with the declines in commodity futures.

Given ample supply but slow demand, and the turnarounds in downstream styrene monomer units, benzene market is likely to keep weak in short term.
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