US Benzene Prices Continue to Slide Amid Weakened Demand and Industry Challenges

Louisiana (USA)- Benzene prices in the U.S. market continued their downward trend through mid-August, driven by a weak demand outlook from end-use and Benzene derivative manufacturing sectors. The petrochemical industry is grappling with shrinking margins and declining profitability, with overcapacity, especially in China further exacerbating the situation. These challenges, compounded by sluggish Benzene demand and ongoing economic pressures, have prompted industry leaders to implement decisive measures. Benzene retailers and other companies are responding by scaling back production, closing plants, and seeking more efficient operations to weather these difficult conditions.

Amid the latest profit reports, U.S. oil refiners have announced plans to reduce output this quarter, citing narrowing margins and the seasonal dip in demand. Benzene production requires crude oil as the primary upstream element hence, the price variations in the same will proportionally impact the Benzene production. Petrochemical manufacturers are facing similar hurdles, largely due to China's overcapacity.

Positive U.S. economic data has helped to ease investor concerns about a potential recession in the world's largest oil-consuming nation. In West Texas, oil wells are producing significant quantities of natural gas, often surpassing the region's pipeline capacity to transport it. This shortage has led to gas prices at the Waha hub frequently dropping below zero.

In another sector, Canadian National Railway, one of Canada's leading rail companies, formally notified the Teamsters union of its intention to lock out union workers starting early Thursday. The company warned that without a swift and decisive resolution to the ongoing labor conflict, it would be forced to initiate a phased and progressive shutdown of its network, ultimately leading to a full lockout.

The potential rail service disruption has raised concerns within Canada's chemical industry. A significant portion of Canadian chemical production, over 70%, is exported to the U.S., with many producers relying exclusively on rail transportation. The Chemistry Industry Association of Canada (CIAC) has cautioned that without rail service, chemical producers may be forced to halt plant operations within a week. The export of Benzene is expected to face slight impacts.

Various external and internal factors within the domestic market have also influenced Benzene prices. The tight supply chain and moderate demand outlook continue to play a role. According to ChemAnalyst, U.S. Benzene prices are likely to rebound and remain volatile due to weak demand from key end-use manufacturing sectors, including phenol, acetone, and other aromatics. Additionally, the onset of the peak shipping season has strained ocean container capacity, disrupting global trade and driving up freight spot rates, impacting the final Benzene prices in the US market.