Hamburg (Germany)- The Benzene prices in Europe saw a sharp decline due to the continuous drop in aromatic naphtha prices, the primary raw material for Benzene production. Influencing factors for naphtha prices include global geopolitical tensions and ample local stockpiles, affecting Benzene production costs in Europe. Analysts noted a potential weekly loss after interpreting the OPEC+ meeting as signalling an increased supply, which is bearish for prices. OPEC+, the Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed to extend most production cuts into 2025 while allowing a gradual unwinding of voluntary cuts by eight members. Benzene prices in the German market were observed at USD 1185 per MT, FOB Hamburg, in the first week of June 2024.

Additionally, the Drag Reduction Agent (DRA) market is experiencing rapid growth due to its rising adoption in the petrochemical industry. These agents, known as drag-reducing polymers, are essential in pipeline operations by reducing turbulence and enhancing pipeline capacity through laminar flow.

The significant drop in demand for Benzene, coupled with ample inventories from its downstream sectors (such as styrene and other aromatics) and other derivatives, has impacted final Benzene prices in Europe. Market experts observed that eurozone inflation continued to decline, exceeding a 2% drop, attributed to ongoing decreases in energy prices and reduced upward pressure on industrial goods, affecting the overall production cost of Benzene in Europe.

Shipping lines and intermodal operators have alerted shippers about disruptions in road and rail freight operations in Germany due to severe flooding, which has led to numerous traffic restrictions. Persistent heavy rain in southern Germany has caused extreme flooding that has led to train cancellations, road closures, and train stoppages, affecting both import and export truck and rail operations. German authorities report moderate to severe flooding across the southern region and along much of the Rhine, a major industrial shipping artery in Europe, with disruptions expected to continue for several more days. Water levels along parts of the Rhine have doubled within a few days as heavy storms have battered central Europe.

Germany's Manufacturing PMI has increased in May 2024, the highest level in four months. Benzene plays a crucial role in this production chain, and its prices in the regional market reflect this impact. Additionally, the demand forecast for Benzene from industries using monomers, aromatics, and solvents is likely to impact its final prices in the local market. The continuous decline in demand for styrene, solvents, and aromatics may have the final say in the Benzene prices.