The U.S. benzene market saw erratic trading activity in August due to large swings in benzene price due to shifts in export demand and mismatches of supply and demand. On the other hand, the Germany market continued its face-slapping bearishness dwindling from weak regional and international demand and oversupply downstream. Developments in crude pricing, regional demands in early August, and logistics continued to be the key metrics in both markets.
The benzene markets in the U.S. and Germany took different paths in August, due to differing regional downstream demand, and reactions to global trends. There was a month of wild volatility in the U.S. market, with a sudden decline in the last week of August, while the German price trend was bearish, with sustained bearishness but not as wild as U.S. market price moves.
The US Benzene market entered August on a stable footing, with FOB Louisiana prices stabilize in the first week. There were stable domestic fundamentals, including steady feedstock supply and demand from sectors like phenol and LAB, that too kept crude oil costs from negatively affecting the market.
However, that stability gave way with the first signs of softening demand from some downstream sectors like polystyrene and styrene presented. The second week experienced Benzene price declines, due to weaker international demand from buyers like China and Mexico, while crude prices were also falling at the same time. Prices then rallied again mid-month, counterintuitively, due to stable demand from the aromatics and polymer sectors. Then, this Benzene price recovery proved to be short-lived. The last weeks of August were again met with a sharp correction, Benzene prices crashing due to the increasing lack of alignment on supply and demand, as demand failed to match the robust additional volumes of new production.
On the other hand, Germany's benzene market had generally bearish sentiment. Prices dropped by 1.3% in the first week as demand was falling and leading to increased supply, particularly in the polymer market, where styrene and polystyrene activity remained slow. Demand for Benzene fell in part due to seasonal factors and high financing costs were still putting buyers on alert. Additionally, there was weak international demand coming from China and France with Chinese buyers reducing their imports altogether. Despite global crude oil prices falling in the second week, benzene prices were stable in Germany. The continued demand from downstream phenol and detergent markets helped to lessen a cost burden that was contributed to previous price weakness. It was however important that benzene stock inventories were manageable to factor rebound logistics involved with benzene demand. Stability gave way to bearish sentiment once again after mid-August where prices had fallen again "due to the costs of crude oil falling imperfectly in tandem with sluggish downstream demand." A final reduction in German benzene prices concluded the month, demonstrating that pricing can distinctly separate from other feedstock components directly influenced by weak overall aromatics demand.
The contrasting experiences in the USA and Germany in August highlight the complexity of underlying factors. The USA Benzene market experienced volatility transition from changing export sentiment and supply-demand dislocations domestically and in the import market. Germany Benzene market experienced a more sustained bearish dynamic driven by sluggish regional demand and soft international demand. The relationship between crude oil trends, shifts in regional demand, and logistical factors remains key for both markets.
Looking ahead, USA benzene prices face mild upward pressure due to balanced domestic fundamentals, despite freight inflation. Germany's Benzene prices may soften further as ample supply, sluggish downstream demand, and bearish international sentiment persist. Crude oil volatility remains a key wildcard for both.
