Balanced market softens prices
By Staff -- Purchasing, 2/12/1998
Here's some good news for buyers: Benzene prices are going to soften in 1998, dropping about 5cents/gal, and won't rise through year-end. Suppliers have solved certain production problems, and a balance of demand exists among end-use markets. Supply will return to a comfortable level, remaining plentiful for the next three quarters.Contract prices will drop from the current $1.00/gal to 95cents/gal later this year, with spot prices following the same pattern. Industry production difficulties that strained supply lines in 1997 have been eased. Supply disruptions had pushed prices "unusually high," according to Bruce Pickover, vice president at market research firm Chem Systems, Tarrytown, N.Y.
Tags were higher in 1997, holding at $1.00-$1.05/gal. Respondents to Purchasing's monthly survey of chemical buyers had reported year-end prices at $1.03/gal for both contract and spot buys. Factors in the latter half of 1997 included high demand for primary derivatives styrene, cumene, and cyclohexane. Houston, Tex.-based pace Consultants report that derivative demand had pushed benzene consumption up 1.3% in third quarter 1997 above mid-year levels. That increase in orders stiffened tags slightly since supply already was tight.
Buyers have a number of factors to track to anticipate benzene price movement. Toluene is one factor, since it contributes to one method of benzene production. Pickover notes that although the relationship isn't as direct as it used to be, toluene activity offers some indication of future benzene price movement. That off-and-on relationship was evidenced in toluene's higher peaks and larger dips in 1997 than benzene's tags experienced. Toward the end of the year, the two chemicals' prices were nearly the same.
Supply levels are expected to be recouped in 1998. The upturn in derivative demand in third quarter 1997 had prompted "a withdrawal from inventory" among end users, according to pace. However, diminishing use of benzene in gasoline in Japan and weaker crude oil prices in early 1998 are setting the stage for more product on the market, according to Chem Systems' Pickover.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
