US Benzene Market Sees Stability Amid Rising Freight Rates and Softer Demand Outlook

Texas (USA): The Benzene market in North America has remained stable with positive market dynamics. Moderate demand from end-use manufacturing sectors such as phenol and others has significantly influenced Benzene prices in the region. There is a notable correlation between crude oil and Benzene prices, as naphtha production, essential for Benzene, is directly affected by fluctuations in domestic crude oil prices. Hurricanes have notably disrupted petroleum markets, impacting crude oil production and refining operations. Benzene prices in the North American market were observed at USD 1,170 per MT, FOB Louisiana, for the week ending June 21, 2024, reflecting a modest increase of around 1%. There is a modest rise in the prices in the last few weeks while there are subtle changes in the market dynamics.

The onset of the summer demand season in the US has failed to stimulate the gasoline markets, with fundamentals indicating a sluggish summer. Gasoline markets remain weak, with USGC cracks declining by a few dollars over the past week. The Atlantic Basin is still seeking a bottom for gasoline cracks, with US implied demand falling short.

US factory output exceeded expectations in May, with a notable increase in Benzene production, according to Federal Reserve data. This suggests a partial rebound in the manufacturing sector last month, despite the Federal Reserve maintaining high interest rates, which have also adversely affected Benzene production rates.

Container freight rates on key north-south and east-west Brazilian routes are soaring due to strong demand and capacity shortages for shipments to and from South America. Brazilian forwarders report that rates from Brazil to North America have reached their highest level in a year, while rates on the Asia-East Coast South America trade are at a near two-year high. Local shippers blame rate hikes partly on worsening delays at key Brazilian ports, where construction closures are overwhelming other routes.

According to ChemAnalyst, Benzene prices in the US market may continue to rebound and remain volatile, affected by soft demand from end-use manufacturing sectors such as phenol, acetone, and other aromatics. A shortage of ocean container capacity has disrupted global trade at the onset of the peak shipping season, driving freight spot rates up by approximately 30% in recent weeks. Supply chain issues, exacerbated by adverse weather conditions, extended ocean transit times, and vessels skipping ports, are expected to impact the final price dynamics of Benzene in the North American market in the coming weeks.