China's benzene stands above 5,000yuan after 11 months

East China benzene price rose to eleven-month-high of 5,205yuan/mt Thursday on healthy fundamentals, an increase of 180yuan/mt day on day and a sharp week-on-week increase of 575yuan/mt, according to CCFGroup. In Shandong, prevailing offers increased to 4,950yuan/mt and coal-based benzene was around 4,800yuan/mt.

Sinopec has revised up benzene listed price three times within a week, starting from January 30. The new listed price was 5,150yuan/mt. The newest offer of PetroChina was 5,200yuan/mt, Sinochem Hongrun Petrochemical 5,350yuan/mt, and ChemChina 4,950yuan/mt.

CFR China benzene was $713/mt on February 4, around 5,308yuan/mt on RMB parity, around 53yuan/mt higher than March East China benzene of 5,255yuan/mt.

Benzene market fundamentals haven showed signs of improving on tight supply but healthy demand. And in end January, Ningbo Zhongjin Petrochemical failed to restart its 3.2 million mt/year reformer and the delay was said to be around 25-30 days. Zhongjin's benzene capacity is 490kt/year and the monthly output is around 35kt. The delayed restart of Zhongjin has triggered the strong upward move in benzene prices recently. Meanwhile, CNOOC plans to close its Phase II refinery and 1.8 million mt/year reformer in March-April for around 50 days of scheduled maintenance.

Benzene inventory decreased by around 6kt week on week to 195.8kt in East China ports on Feb 3, according to data released by CCFGroup. Due to thin transactions on imported cargoes previously, January benzene import was estimated at only around 100-120kt, and February would keep at a low level.

In downstream, overall operating rates remained high on improving margins. Styrene and CPL prices were also supported by the strong upward move in feedstock benzene prices recently. Anhui Jiaxi New Materials Technology achieved on-specification styrene on January 28 at the new 350kt/year styrene unit. Sinochem Quanzhou Petrochemical plans to feed raw materials to its 250/450 kt/year POSM unit in Fujian province in mid-February, and is expected to get on-spec PO in early March and on-spec styrene in late March.

Benzene market remains strong recently on better supply-demand structure and firmer oil prices. Sinopec's price hike also lends strong supports to the market. Next week, traders would begin the Chinese New Year holidays, and overall discussions would be thinner.