Benzene Prices Plunge in Latin America Amidst Weakened Downstream Demand

Santos (Brazil)- Benzene prices in the Brazilian market have continued to decline due to weak demand from end-use manufacturing units, including styrene, phenol, and other aromatics. Crude oil prices significantly influence downstream Benzene prices, as the production of aromatic naphtha (used in Benzene production) is closely linked to crude oil price fluctuations in the domestic market. New orders decreased, while order backlogs contracted at a faster rate than in March, and inventories decreased at a similar pace.

The steam cracking process, utilized to produce naphtha, plays a pivotal role in determining Benzene prices, thus any alterations in crude oil prices have a proportional impact on Benzene prices. Moreover, demand for Benzene from sectors like styrene, acetone, and other aromatics has remained sluggish in the domestic market, further impacting Benzene prices. With an overall decline of 3.7%, the closing price of Benzene was observed at USD 1040 per MT, FOB Santos in the Brazilian market.

Recent price dynamics of Benzene in the Brazilian market have been influenced by external factors such as geographical challenges, adverse weather conditions, supply disruptions, and port conditions in the domestic market. Continuous rainfall has disrupted the supply chain, leading to temporary halts in industrial and port operations.

Braskem plants at the Triunfo petrochemical hub in Brazil have ceased operations due to logistics issues and limited access to water. The company has suspended all operations in Rio Grande do Sul state due to severe flooding in the region. Despite this, Braskem's polymer inventories remain unaffected by the heavy rainfall in southern Brazil over the past two weeks. The floods have impacted at least 428 cities and 1.5 million people, resulting in 107 confirmed deaths and 136 people missing, according to the latest emergency service report. Fortunately, there has been no permanent damage to the industrial facilities.

Crude Oil prices saw a slight increase on Wednesday following reports of a decrease in U.S. crude inventories last week. WTI crude oil prices decreased by 3% on weekly basis during the week ending 3rd May 2024. This decrease was attributed to refineries gradually ramping up production in anticipation of the summer driving season. Yet, the progress was restrained by a firmer dollar.

According to ChemAnalyst's analysis, Benzene prices in the North American market are expected to further decrease in the coming weeks. This forecast is based on ample crude oil inventory availability and the ongoing decline in demand for Benzene from styrene and other aromatics manufacturing units. Meanwhile, End-use enquiries are expected to be considered insufficient.