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Will China's lockdown affect the Benzene market despite the soaring crude prices?

Will China's lockdown affect the Benzene market despite the soaring crude prices?

Will China's lockdown affect the Benzene market despite the soaring crude prices?

  • 21-Apr-2022 6:42 PM
  • Journalist: Nina Jiang

As per the ChemAnalyst database, Benzene prices dropped in the Chinese market in the third week of April despite the rising crude prices. Also, the increasing COVID cases and lockdown implementation have been affecting China's domestic market, which further backed up the price drop.

Benzene is the direct derivative of crude. Despite the rising upstream crude oil because of Russia's invasion on Ukraine, Benzene values witnessed a fall in the Chinese market. The Benzene market has been badly impacted by the price drop because of negative demand from downstream sectors as a result of the market closure, resulting in a downward trend.

China's zero – tolerance COVID policies and lockdown in certain affected cities resulted in shrinking production activities. Shanghai, China's largest metropolis, is in its third week of lockdown, affecting the price of Benzene by shutting down millions of production sectors and local markets. In addition, the suspension of logistics, transportation, and production has caused a drop in the Benzene market. As a result, on 15th April, Benzene prices dropped to USD 1140 per MT CFR Shanghai.

Furthermore, the devastating pandemic effect had an impact on trade activity, particularly imports and exports. The tightening lockdown restrictions, and the labour shortage, continued to hamper the offloading and onloading activities, leading to imports falling. Also, the port congestion caused delays in the exports, provoking the market participants to seek out other suppliers. As a result, adequate inventory levels have been adding fuel to the current worsening situation.

As per the ChemAnalyst, "Benzene prices are expected to drop in the forthcoming weeks as the demand drop is expected to remain weak due to the rising COVID cases and market closures. Trade activities might further affect the supply chains, which might lead to ample availability of the product causing the price to fall. Upstream crude values are expected to ease if the Russia and Ukraine war comes to an end.”

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