North American benzene (BZ) and derivative styrene monomer (SM) production and operating rates may decline in 2025 as production costs climb.
SM and derivative output will likely see a drop due to the permanent closure of a SM plant in Sarnia and an acrylonitrile butadiene styrene (ABS) plant in Ohio.
In 2024, SM operating rates averaged about 71-72pc of capacity, up by 1-2 percentage points from the year prior, according to Argus data. In 2025, operating rates are expected to pull back closer to 70pc due to lackluster underlying demand, offsetting the impact of the two plant closures.
Many SM producers on the US Gulf coast are entering 2025 at reduced rates due to high variable production cash costs against the SM spot price. The BZ contract price and higher ethylene prices recently pushed up production costs for SM producers.
A heavy upstream ethylene cracker turnaround season in early 2025 will keep derivative SM production costs elevated in Louisiana, stifling motivation for some downstream SM operators to run at normal rates.
Gulf coast BZ prices typically fall when SM demand is weak. But imports from Asia are projected to decline, leading to tighter supply in North America that could keep BZ prices elevated.
BZ imports from Asia are expected to decline in 2025 because of fewer arbitrage opportunities, as Asia and US BZ prices are expected to remain near parity in the first half of the year. The import arbitrage from South Korea to the Gulf coast was closed for much of the fourth quarter of 2024. Prices in Asia have garnered support because of demand from China for BZ and derivatives, as well as from aromatics production costs in the region that have increased alongside higher naphtha prices.
In January-October 2024, over 60pc of US BZ imports originated from northeast Asia, according to Global Trade Tracker data. Losing any portion of those imports typically tightens the US market and drives up domestic demand for BZ.
But tighter BZ supply due to lower imports may be mitigated by SM producers, if they continue to run at reduced rates in 2025. The US Gulf coast is around 100,000 metric tonnes (t) net short monthly on BZ, but market sources say the soft SM demand outlook for 2025 will cut US BZ import needs almost in half.
Despite fewer BZ imports to North America, reduced SM consumption could hamper run rates for BZ production from selective toluene disproportionation (STDP) unit operators.
The biggest obstacle for STDP operators in 2025 will like be paraxylene (PX) demand. Since STDP units produce BZ alongside PX, there needs to be domestic demand for PX. But demand has been weak due to PX imports and derivative polyethylene terephthalate (PET).
STDP operations increased at the end 2025 after running at at minimum rates or being idled since 2022. This came as BZ prices consistently eclipsed feedstock toluene prices.
The BZ to feedstock nitration-grade toluene spread averaged 30.5¢/USG in 2024 and the BZ to feedstock commercial-grade toluene (CGT) spread averaged 49.25¢/USG, according to Argus data. This means that for much of the year STDP operators could justify running units at higher rates to produce more BZ and PX.
But another challenge to consider on STDP run rates in 2025 is the value of toluene for gasoline blending compared to its value for chemical production. In 2022 and 2023, the toluene value into octanes was higher than going into an STDP for BZ and PX production. Feedstock toluene imports are poised to fall in 2025, a factor that would narrow STDP margins and further hamper on-purpose benzene production in the US in 2025.
