Houston (USA)- The Benzene prices in the US market witnessed a push in mid-February 2024 as the supply chain remained tight, accompanied by an increased demand outlook from the aromatics and other petrochemical-producing and manufacturing units. Petrochemical production in the US and China has surged, raising concerns that the industry's excess capacity will further squeeze margins and increase operating costs for players already under pressure. The prices of Benzene are likely to remain firm in the coming weeks.

In the second month of Q1 2024, Benzene prices in the US market jumped nearly by 5%, with quotations settling at USD 1220 per MT, FOB Louisiana in the week ending February 16th. Petrochemical production typically sees a surge in the first quarter of the year. This is driven by the need to restock Benzene inventory, especially before and after the Lunar New Year in the Asian market. Additionally, many petrochemical producers scheduled maintenance shutdowns for their plants in January and had planned the shutdowns till the end of February.

This Benzene manufacturing chain included Royal Dutch Shell, BASF Total Petrochemical, and LyondellBasell Industries Holding B.V, which went into Force Majeure owing to unfavorable weather conditions, potentially causing production outages and further boosting Benzene demand in the first quarter. The US economy is showing remarkable resilience, but the chemical industry is facing a tougher outlook. Despite the IMF's upward revision of global GDP growth for 2024 to 3.1% from 2.9%, largely due to improvements in the US, chemical companies' guidance for Q1 after Q4 earnings calls suggests a challenging start to the year 2024. The kick witnessed in the price dynamics occurred as analysts noticed a significant rise in container leasing rates for shipments from Asia to North America, attributed to the ongoing Red Sea crisis affecting naphtha and Benzene exports.

The analysis has revealed a threefold increase in rates, indicating a shift in the supply and demand dynamics of Benzene in the domestic and international markets. The rise in consumer spending and retail sales indicates that there will likely be a strong recovery in demand for goods. This means that there will be an increase in the demand for containers as retailers replenish their inventory and fulfill consumer orders.

Given the Red Sea crisis, transit times via the Cape of Good Hope have been extended by 2 to 3 weeks, leading to increased demand and capacity constraints on the China-US trade route. As per ChemAnalyst, towards the end of the second month of Q1, Benzene prices are anticipated to move steadily and continuously owing to increased demand from the international market escorted further by the leveled production cost due to naphtha prices.