During the week ended May 23^rd, Brazilian prices of benzene jumped 6% mainly based on higher energy costs and heightened industrial imports that are constricting supply and raising production costs. Although Latin America's demand for benzene from major downstream industries like styrene is subdued and stable, such cost pressures resulted in the significant price hike solely within Brazil's market.

Demand from styrene producers, the biggest users of benzene, is weak as producers in synthetic rubber, plastics, and other petrochemical industries are moving cautiously in light of wider economic uncertainty. Low demand has kept price volatility at bay in the region with most markets registering benign benzene consumption. But in Brazil, increasing costs of operations, particularly from higher electricity tariffs, are affecting benzene supply economics and are partly responsible for the latest price increase.

Latin American supply conditions are supported by strong crude oil production, especially from Brazil's offshore and Guyana's increasing production. TotalEnergies recently brought on production from the Mero-4 phase of the Santos Basin, increasing Brazil's oil capacity with five FPSOs producing a combined 770,000 barrels per day. This greater availability of crude oil feedstocks is essential to ensure the continuation of benzene production, underpinned by efficient measures like reinjection of gas and zero routine flaring. Crude oil stocks in the region, in turn, are steady, providing the market a cushion against abrupt supply shocks.

On the crude oil pricing side, prices picked up after U.S. President Donald Trump pushed back the deadline for the EU trade agreement until July, lowering tariff risks. This as a silver lining amid oversupply worries as OPEC+ sets plans to increase output in June and July, putting pressure on prices lower. All these mixed pricing dynamics have a direct impact on the cost of producing benzene as well as market sentiment in Latin America.

In Brazil, increasing electricity prices, which are expected to rise by as much as 9%, in combination with growing industrial imports, have exacerbated benzene producers' cost pressures. Logistics and infrastructure limitations, such as truck driver shortages and storage space constraints, can still impact distribution effectiveness but are actively being addressed through industry-wide collaborative action.

Overall, the larger Latin American benzene market maintains a well-balanced supply-demand scenario with little volatility, but Brazil is different with price hikes fueled by increasing energy expenses and competitive import incentives. As crude oil output and processing capacity keep rising regionally, the benzene market is poised for modest, though steady, growth in the near term.