US Benzene Market Tumbles Against Supply Disruptions Amidst Low Demand

Benzene prices in North America have experienced a notable decline, primarily driven by reduced demand from end-use manufacturing sectors and a general sluggishness in the market. This situation has been exacerbated by recent natural disasters, which have disrupted operations, and shifts in domestic oil inventories that have created uncertainty. Additionally, the existing imbalance between demand and supply, both regionally and internationally, has further pressured Benzene pricing dynamics in the U.S. market. Contributing factors to this decline include fluctuations in production costs and ongoing supply chain disruptions. Major downstream derivatives of Benzene, such as styrene monomer, phenol, and cumene, continue to exhibit weakened demand. Furthermore, price volatility in naphtha, an essential feedstock for Benzene production, has directly influenced overall pricing trends.

Meanwhile, U.S. crude oil inventories declined across the board last week, according to the Energy Information Administration, with a larger-than-expected drawdown, and crude oil stockpiles reaching their lowest level in almost two and a half years. This scenario has impacted the overall production volume and cost of Benzene in the US market.

Market participants have acknowledged that even those with a bearish outlook on oil admit the market is currently under-supplied. A commodity chemical producer in the U.S. will have significantly different options compared to those in Europe and Asia due to variations in cost competitiveness. However, they warned that strong market sentiment persists, with expectations of an oversupply of stocks next year cautiously alerting the crude oil and its derivative market such as Benzene manufacturers.

Looking to the supply in the market, the Helene intensified into a hurricane, continuing its path towards a sparsely populated area in northwestern Florida, where it is expected to make landfall later in the week, meteorologists reported.  However, the shipment is hampered further impacting the trade volume of Benzene in the international market as well. Due to Hurricane Helene, nearly 30% of U.S. oil production in the Gulf of Mexico has been halted, as companies brace for the storm, which meteorologists anticipate will intensify into a strong Category 4 hurricane before making landfall in a sparsely populated area of northwestern Florida.

As per ChemAnalyst, the Benzene market dynamics are anticipated to dip in upcoming weeks as the hindrance in the operational activities and the continuous fluctuations witnessed in the crude oil inventories and the prices are expected to showcase its effect. Moreover, the Southern American and Asian markets had witnessed temporary plant shutdowns impacting the overall volume availability against the weak demand. These factors combined affect the price range of Benzene in the US market.