US Benzene Market Stability Challenged by Crude Oil and Tight Supply

Texas (USA)- The North American Benzene market has remained stable, supported by positive and steady demand. Moderate demand from end-use manufacturing sectors, including phenol and other aromatics, has significantly impacted Benzene prices in the region. There is a clear correlation between crude oil and Benzene prices, as naphtha production, crucial for Benzene, is directly influenced by changes in domestic crude oil prices. Hurricanes have notably disrupted petroleum markets, affecting crude oil production and refining operations.

The North American Benzene market has stayed stable due to positive market dynamics. Moderate demand from end-use sectors like phenol and other aromatics has significantly affected Benzene prices in the region. Benzene prices are closely linked to crude oil prices since naphtha production, vital for Benzene, is directly impacted by fluctuations in domestic crude oil prices. Hurricanes have significantly disrupted petroleum markets, influencing crude oil production and refining operations.

The Organization of the Petroleum Exporting Countries maintained its forecast for robust global oil demand growth in 2024 and the following year, stating that resilient economic growth and increased air travel would boost fuel consumption during the summer months. However, gains were limited as supply disruptions at refineries and offshore production facilities from Hurricane Beryl were minimal.

The port terminal bottlenecks are contributing to price increases, despite data showing that container bookings fell by 48 percent in June compared to May. Shipping market experts has reportedly warned of ongoing congestion at major ports in Southeast Asia and China, with vessels in Singapore experiencing an average wait time of seven days to dock. Traders will closely examine a monthly report from the Organization of the Petroleum Exporting Countries for insights into the global market outlook, ahead of the International Energy Agency's assessment.

These bottlenecks could be exacerbated by ongoing labor contract negotiations by the International Longshoremen’s Association (ILA), which represents port workers at East Coast and Gulf Coast ports in the U.S. reports that the threat of a strike is growing due to the lack of progress in labor talks.

These external and internal factors in the domestic market compiled to govern the final prices of Benzene as the supply chain is tight with moderate demand outlook. According to ChemAnalyst, Benzene prices in the US market are likely to continue rebounding and remain volatile due to weak demand from end-use manufacturing sectors like phenol, acetone, and other aromatics. The onset of the peak shipping season has seen a shortage of ocean container capacity, disrupted global trade and driven up freight spot rates.