The prices of Benzoic acid increased in the US on the back of the increased raw material prices and are likely to stabilize by mid-February

As the delta variant of the coronavirus is driving an unprecedented wave of infection around the world, resulting in mass absences of staff in multiple industries, several manufacturing units in the US have suspended their operations in order to curb the spread of the virus. The demand for gasoline in the US domestic market is expected to remain bullish in the upcoming months amid the Omicron outbreak. Many countries, including the US, have implemented temporary travel restrictions to slow the spread of the virus. President Biden announced that the country would not impose the lockdown but rather stay focused on vaccines.

As Per ChemAnalyst, the prices of Benzoic Acid witnessed an increment in the first week of 2022 on the back of the increased upstream Toluene prices. Benzoic acid prices escalated from USD 4300/tonne to USD 4349/tonne CFR New York, showcasing an increment of 1.1% from the last week of December 2021 to the first week of Jan 2022. The upstream toluene market could in the US could start witnessing the effects of the International Maritime Organization's (IMO) global sulfur cap in 2022, which limits the sulfur content in the fuel oil used on ships from 3.5% to 0.5% due to heightening environmental concerns.

Fearing the shortage of gasoil as a feedstock is tightening the Toluene supplies and boosting its prices, which is further resulting in the increased prices of Benzoic Acid in the country.

Since the 3rd quarter of 2020, the US has been importing Toluene of around 38,000 tons per quarter from countries including the Netherlands, China, and Estonia. Increased Toluene prices in China due to high domestic prices ahead of the Lunar New Year is another reason supporting the price trend of Benzoic Acid in the US.

What lies ahead?

As per ChemAnalyst, the current market scenario is likely to prevail in the US domestic market until the end week of January. According to market experts, it is anticipated that the market dynamics will showcase stability by the mid-week of February owing to the ease in the prices of raw materials. However, the impact of the IMO 0.5% sulfur cap has yet to be realized in the US aromatics market, but as demand for aromatics, including Toluene, returns to pre-pandemic levels, refineries could struggle to cater to the increased demand for Benzoic Acid in the country.