US benzene hits 18-month high on tight supply
US benzene (BZ) this week reached an 18-month high on tight prompt supply, shipping delays and steady demand.
US BZ increased on Tuesday by 1.5¢/USG to 427.5¢/USG, the highest Argus assessment since 29 July 2022.
A heavy US refinery turnaround season in the current-quarter reduced US Gulf coast refining rates to 80.6pc last week, according to the Energy Information Administration. Refinery maintenance reduces reformer operating rates, yielding less derivative gasoline and aromatics, such as benzene.
Benzene from reformate comprised an estimated 70pc of US benzene production last year — up from 66.5pc in 2022 — so reduced refinery rates have meant even less BZ availability in the snug domestic barge market and more reliance on imports.
But logistics constraints, including low water levels at the Panama Canal and ongoing Red Sea vessel attacks, have delayed BZ import arrivals from Asia.
Transpacific shipping costs for a 40,000 metric tonne (t) midrange vessel have climbed to $120/t, up from $80/t a year ago, as transit times have lengthened from 35 days to 55-60 days. Transatlantic transit shipping costs have nearly doubled over the past year from $32/t to $60/t for a 10,000t cargo.
Higher freight costs and longer transit times have prompted US traders to bid up BZ to attract imports. Additionally, delays in imports arriving have led to some short covering efforts until volume does arrive, further supporting prices.
Benzene inventories ended 2023 at low levels, estimated by Argus at just 16 days of rateable consumption, compared to previous year-end levels above 20 days of consumption.
A revival of C6 exports — including BZ derivatives styrene monomer and cyclohexane — as well as forward demand for blendstocks ethylbenzene and cumene, has also supported a 33pc rebound in BZ prices since 2 January, when BZ started the year assessed at 322¢/USG, according to Argus data.
The BZ-to-crude ratio, a metric for valuing derivative US Gulf coast BZ relative to upstream feedstock WTI crude, reached an 18-month high on 12 February at 2.33, when BZ hit 426¢/USG and March WTI crude futures settled at $76.92/bl. The BZ-to-crude ratio has averaged below 1.9 over the past five years. In a balanced US benzene market, spot benzene generally averages 1.95 times the value of front-month WTI futures.
Related news posts
Australian coal rail line to shut for 2 weeks: Coronado
Australian coal rail line to shut for 2 weeks: Coronado
Sydney, 25 July (Argus) — The Blackwater rail line in Queensland, Australia will be closed for up to two weeks because of maintenance, which will restrict coal deliveries to the key port of Gladstone. The maintenance program will run from late July to early August, coal mining firm Coronado said on 25 July. This is limiting metallurgical supply from Queensland and pushing up the price of pulverised coal injection (PCI) coal relative to Australian premium low-volatile coal, it added. The two-week shutdown was planned before Coronado released its 16.4mn-17.2mn t saleable coal guidance for 2024 , which it still expects to reach despite a week-long outage on the Blackwater line in June-July following a collision . Shippers appear prepared for the reduction in shipping from the 102mn t/yr Gladstone port over the next couple of weeks, with just 12 ships queued outside the port on 25 July, down from 23 on 6 June and below-average queues of around 20. Coal is delivered to Gladstone through the 100mn t/yr capacity Blackwater rail line and the 30mn t/yr capacity Moura line, both of which are operated by Australian rail firm Aurizon. Gladstone's shipments fell by 9.5pc in June compared with a year earlier, partly because of rail constraints. Around two-thirds of Gladstone's coal shipments are metallurgical coal and a third are thermal. A fire at UK-South African mining firm Anglo American's Grosvenor mine already hit Australian metallurgical coal exports, which led the firm to cut its 2024 production guidance to 14mn-15.5mn t from 15mn-17mn t. The premium for premium hard coal prices over PCI coal prices has shrunk to around $30/t from $145/t over the past six months. Argus last assessed the premium hard low-vol price at $224/t fob Australia on 24 July, with the PCI low-vol price at $193.65/t. Aurizon and Gladstone Port were contacted for comment, but have yet to respond at the time of writing. By Jo Clarke Australian coal price comparisons ($/t) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s Resonac to optimize petchem business
Japan’s Resonac to optimize petchem business
Tokyo, 23 July (Argus) — Japanese petrochemical producer Resonac plans to optimize part of its petrochemical business by creating a new wholly-owned subsidiary by 1 August. Resonac decided on 23 July to set up Crasus Chemical, which will take over production of basic petrochemical goods from Resonac. It aims to set up the subsidiary as an independent, listed company to clarify and facilitate performance evaluations and to simplify a chain of command to speed up decision making. Resonac plans to achieve quicker decarbonization of its petrochemical production and to enhance competitiveness and profit growth. Crasus will be in charge of manufacturing and selling basic petrochemical goods like ethylene and propylene, goods made from acetic acid and synthetic resins. Resonac owns the 618,000 t/yr Oita ethylene cracker in south Japan's Oita prefecture that will will also be transferred to Crasus. Petrochemicals has accounted for around 20pc of Resonac's sales revenues. Japan's petrochemical firms have attempted to optimize their businesses with intensifying international competition and shrinking domestic demand. Mitsubishi Chemical has also tried to reorganize its basic petrochemical business, although it has yet to announce firm plans. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US House to vote on waterways bill
US House to vote on waterways bill
Houston, 22 July (Argus) — The US House of Representatives is expected to vote on 22 July on a waterways bill that would authorize new infrastructure projects across ports and rivers. The Water Resources Development Act (WRDA) is renewed typically every two years to authorize projects for the US Army Corps of Engineers (Corps). The bipartisan bill is sponsored by representative Rick Larsen (D-Washington) and committee chairman Sam Graves (R-Missouri). The full committee markup occurred 26 June, where amendments were added, and the bill was passed to the full House . A conference committee will need to be called to resolve the different versions of the bill. The major difference between the bills is that the House bill does not include an adjustment to the cost-sharing structure for the lock and dam construction and other rehabilitation projects. The Senate Committee on Environment Public Works passed its own version of the bill on 22 May, with all members in favor of the bill. The House version of the bill approves modifications to the Seagirt Loop Channel near the Baltimore Harbor in Maryland, along with 11 other projects and 160 feasibility studies. One of these studies is a $314.25mn resiliency study of the Gulf Intracoastal Waterway, which connects ports along the Gulf of Mexico from St Marks, Florida, to Brownsville, Texas. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mitsubishi, Neste aim to boost bio-naphtha supplies
Mitsubishi, Neste aim to boost bio-naphtha supplies
Tokyo, 16 July (Argus) — Japanese trading house Mitsubishi and Finnish refiner Neste plan to boost sales of Neste's biomass-based naphtha by enhancing their partnership in Japan. The companies signed a partnership agreement on an unspecified date, aiming to co-operate on prompting a switch from conventional petroleum naphtha to Neste's bio-naphtha. They plan to encourage Japanese downstream companies or users of petrochemical goods and plastics, like food and beverage suppliers, apparel firms and electric appliance manufacturers, to introduce bio-naphtha into their supply chains. Mitsubishi and Neste have already partnered on delivering bio-naphtha to produce renewable paraxylene for Japanese consumers Goldwin and Suntory . Japanese companies are increasingly attempting to incorporate bio-naphtha for their decarbonisation strategies. Japanese petrochemical producer Resonac has produced biomass-based olefins like ethylene and propylene since June by purchasing bio-naphtha from Neste. Fellow petrochemical producer Mitsui Chemicals bought bio-naphtha from Neste to process it at its Osaka cracker. Idemitsu and Toray have been partnering to produce styrene monomer and acrylonitrile butadiene styrene resin from bio-naphtha. Japan imported 6mn t of petroleum naphtha during January-May, down by 5.9pc from the same period in 2023, according to finance ministry data. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more