High Benzene Prices Grip US Market Amidst Supply Pressures and Strong Demand

Benzene prices in the US market continued to remain on the higher edge amidst the inclined demand and the limited supply chain of the upstream in the domestic market. Amid the persistent challenges facing the worldwide petrochemical industry, the stronger rebound in gasoline and transport fuel demand this year has caused trade dynamics to shift for several chemical products that are finding greater value in blending, raising the demand for Benzene. By the conclusion of the last week in September, Benzene prices were evaluated at $1256 per metric ton, with a Free on Board (FOB) arrangement in Louisiana.

Benzene prices in the US market remained elevated through the conclusion of the ninth month of 2023 due to increased demand from downstream sectors such as styrene, cumene, ethylbenzene, and acetone. The predominant factor affecting the overall Benzene market dynamics is the rise in crude oil prices and limited inventories in the US market. Additionally, a surging US dollar and escalating bond yields are causing concerns in the oil market. The US dollar has reached a 10-month high, resulting in higher costs for non-dollar currency holders and potentially reducing demand. Furthermore, the higher bond yields indicate increased storage expenses for oil, which could incentivize traders to deplete inventories further.

Nonetheless, the market currently hovers precariously near the minor support threshold. A break below this level has the potential to bring about a significant shift in the economic situation and the proportionate impact on Benzene production in the US market. While the overall outlook remains positive, such a movement would suggest a loss of momentum and could attract additional sellers to the market. The crude oil inventories in the country are limited amidst the limited accessibility of OPEC oil in the Asian market, leading to inclined demand.

The price outlook for Benzene also depends on the demand outlook from downstream (cumene, acetone, maleic anhydride, and other aromatics). According to ChemAnalyst, Benzene prices are expected to rise further in the domestic market. This is due to the operational rate and the increased production costs, which will likely significantly influence the Benzene market's overall dynamics. Additionally, it's worth noting that the impact of higher interest rates on the economy may take some time to become fully evident, as there are substantial delays in the process. US Federal Reserve officials have expressed that monetary policy must remain restrictive for an extended period to bring inflation back down to the Fed's 2% target. However, behind their agreement on this statement lies an ongoing debate regarding the possibility of another interest rate hike later this year.