Texas (USA)- Towards the close of December 2023, cumene prices in the U.S. market experienced a decline, attributed to sluggish demand domestically and a constrained supply chain. The final cumene prices were determined by production costs and demand forecasts from end-use manufacturing units in the domestic market. Additionally, benzene (feedstock) prices in the U.S. market followed a downward trend, influenced by controlled crude oil and naphtha prices, prompting retailers to reduce prices for cumene and its derivatives. Cumene was quoted at USD 1440 per metric ton, FOB Louisiana, as of the week ending December 22^nd, 2023.

A major factor impacting cumene prices was the slightly weak demand outlook from phenol and bisphenol A manufacturing and consuming industries in the domestic market over the past few weeks.

Oil prices experienced a nearly 2% decline, offsetting gains, as investors closely monitored events in the Red Sea, leaving cumene manufacturers and retailers in a dilemma. Despite additional attacks in the Red Sea, shippers were observed returning to the region. In the days and weeks leading up to this, both Brent and WTI benchmarks closed more than 2% higher due to concerns about potential disruptions in shipping following recent attacks on vessels in the Red Sea.

The inventories of crude oil and cumene in the U.S. market are sufficient in order to meet demand from both domestic and international markets. Crude oil prices have been influenced by factors such as the recent strength of the U.S. dollar and a notable increase in U.S. bond yields in recent months. Despite these considerations, the most recent OPEC+ meeting disappointed the upward trajectory of oil prices, as investors perceived limited effectiveness of cumene supply cuts on oil markets.

OPEC+ has implemented production cuts to support prices in response to robust non-OPEC+ supply growth and a slowdown in oil demand growth. While this strategy has seen some success, sustaining unity among member nations may prove challenging in 2024 due to the ongoing loss of market share and the rise in non-OPEC+ volumes. The crucial factor for crude pricing in the coming year will be OPEC+'s ability to adhere to voluntary production cuts.

According to ChemAnalyst, cumene prices in the U.S. market are anticipated to move steadily amidst moderate demand and continuous variations in crude oil and naphtha prices. Consequently, production costs may slightly increase, providing manufacturers with an opportunity to secure a better profit margin in the upcoming weeks.