US Benzene Prices start to tumble down in the first week of May 2024

Louisiana (USA): The Benzene prices in the US market decreased compared to the previous week, as the overall production cost of the commodity remained low. Last week, there was an unexpected increase in crude oil inventories in the United States, according to data from the American Petroleum Institute (API). This led to a 3% decline in crude oil futures overnight and an 8% drop over the month, with prices trading. This was driven by signs of weak US demand and easing tensions in the Middle East. The increase in US crude inventories has raised concerns about weakening demand.

 With an overall decline of 1.2%, the concluding price of Benzene was observed at USD 1215 per MT, FOB Louisiana in the US market.

Crude oil plays a crucial role in impacting the final prices of Benzene, as the production and final prices of naphtha (which is upstream of Benzene) are dependent on the price fluctuation of crude oil in the domestic market. The steam cracking process for naphtha production governs the final prices of Benzene; therefore, any fluctuation in crude oil prices proportionally impacts Benzene prices. Moreover, the demand outlook for Benzene from downstream sectors such as styrene, acetone, and other aromatics showcased weaker demand strength in the domestic market, impacting the final prices of Benzene.

The decline in oil futures is happening alongside indications of reduced tensions in the Middle East. Furthermore, a stronger dollar, due to the Federal Reserve's decision to maintain higher interest rates for an extended period, could potentially increase oil prices for consumers, leading to decreased demand. Shipping container rates have been increasing steadily since December, following attacks by Houthi rebels on commercial vessels in the Red Sea. This forced carriers to take the longer route around the tip of Africa before rates levelled off last week. Rail carriers have cautioned that a work stoppage would disrupt supply chains across North America and limit trade between Canada and the US and Mexico. These two railroads handle the majority of freight rail traffic in Canada. In another development, participants in the chemical industry largely supported a final rule adopted by the Surface Transportation Board (STB) on reciprocal switching for inadequate service by railroads.

Benzene prices in the North American market are further anticipated to decline according to ChemAnalyst analysis amidst the availability of sufficient crude oil inventories and the continuous slip in the demand for Benzene from styrene and other aromatics manufacturing units. Customer inventories were considered insufficient, and employment declined once more during the month. New orders returned to a state of contraction, while order backlogs contracted at a quicker rate than in March 2024, and inventories decreased at a similar pace.