Waning demand and crashing crude oil values support the falling prices of Benzene in South Korea

In South Korea, Benzene fundamentals have been crashing since past two months pressured by the waning demand from its major buyer China and incessantly falling prices of Crude Oil. FOB Seoul Benzene prices dropped from USD 908 per MT on 15th December to USD 900 per MT levels on 20th December.

In China, domestic buyers are not interested in stocking inventories as the demand for Benzene seems to slam ahead of year-end holidays along with the upcoming winter Olympics 2022. Moreover, despite the ease in production restrictions to an extent in China, the manufacturers are keeping their production pace slow due to lower demand from the downstream Styrene and Toluene producers. Globally, South Korea is the largest exporter of Benzene. The country exported around 254973 tons of Benzene in November 2021, with the export volume witnessing a hike of 50% year-on-year with China as its leading consumer.

With the increment in the confirmed Omicron cases worldwide, West Texas Intermediate (WTI) as well as Brent crude oil prices are continuously dropping consequently affecting the values of key petrochemical derivatives including Benzene. On 20th December, Brent crude oil prices slipped to USD 69 per barrel from USD 73 per barrel levels recorded on 17th December.

Benzene is a petrochemical derivative, used to make industrially important chemicals including styrene, toluene, cumene, nitrobenzene, cyclohexane, dimethylbenzene, etc. These benzene derivatives find applications across various industrial sectors such as packaging, adhesives, textile, construction, electronics, dyes, paints and coatings, agrochemicals, and pharmaceuticals, among others.

As per ChemAnalyst, Benzene prices are likely to dip further owing to the stifled demand and ample supplies. Moreover, low trading activities coupled with the muted demand for petrochemicals across Asia due to the year-end, kept the market sentiments bearish and tend to ease the values of the product further.

Benzene (C6H6) is an aromatic hydrocarbon and a colorless, refractive liquid possessing a characteristic aromatic odour and toxic vapour. It obtained as a by-product during the Refinery, Naphtha Cracker, Paraxylene and Steel plant processes. Benzene is one of the key building blocks for several petrochemical intermediates such as ethylbenzene for styrene production, cumene for phenol and acetone, cyclohexane for nylon chain and nitrobenzene for aniline. These derivatives are used across many industrial sectors to produce countless consumer goods such as textile, packaging, paints, adhesives, plywood, electronics, dyes, agrochemicals, pharmaceuticals, and several others.

The global Benzene industry is particularly complex because of the different means of production and variety of end uses it involves. Catalytic reforming or steam cracking of liquid petroleum feedstocks and hydrodealkylation (HDA) of toluene and toluene disproportionation (TDP) are some of the common Benzene manufacturing processes used worldwide. Benzene is also co-produced during the production of a paraxylene-rich xylenes stream. Being strongly tied to several commodity petrochemicals, the overall Benzene consumption strongly varies with the general economy and has been increasingly linked to the expanding polymer and petrochemical industries in the emerging countries of the world.