Buyers can expect soft pricing all year
By Staff -- Purchasing, 5/6/1999
Prices for benzene are projected to remain soft in 1999, due to current oversupply, an expected influx of supplies from reformulated gasoline legislation, and new cracker installations and paraxylene plants.Contract prices for benzene have slipped about 10¢/gal in the past year alone, from 92¢/gal on average in the first quarter of 1998 to the current average of 82¢/gal, according to data from buyers responding to Purchasing's monthly chemical transaction price survey.
Spot tags have followed a similar trend, slipping from about 91¢/gal in the first quarter of 1998 to about 82¢/gal in the first quarter of this year.
Data from The pace Consultants, Inc., a petrochemical market analysis firm based in Houston, Texas, supports buyers' prediction of further price slippage for benzene in coming months. It's important to remember that pace's data is obtained from Gulf Coast sources, so its prices are usually a few ¢/gal less than Purchasing's prices, which reflect averages from all areas of the country.
pace's prices for benzene contracts were about 82¢/gal for the first quarter of last year, then slipped to 77¢/gal in the second quarter, and 75.5¢/gal in the third and fourth quarters. The current contract price is 75¢/gal, according to pace.
pace's spot tags have fallen in the same manner, from 78¢/gal in the first quarter of 1998, to about 74¢/gal by the end of the second quarter. Unplanned outages forced spot prices up in the fourth quarter to around 78¢/lb, but the first quarter of this year saw further slippage to about 75¢/lb, according to pace.
And prices are not expected to recover soon. Buyers predict that the average price of benzene six months from now will be 10¢/lb lower, at 72¢/lb for both contracts and spot tags. Buyers expect benzene prices to weaken prices for all aromatics, but especially for mixed xylenes and toluene.
pace predicts that annual domestic benzene production will increase from 2.22 billion gal/yr in 1998 to 2.27 billion gal/yr by the end of this year. By the end of next year, pace expects domestic production to total more than 2.37 billion gal/yr.
Styrene and its derivatives are expected to drive any increases in benzene demand and will account for almost two-thirds of total benzene demand by the year 2005, according to a report issued by Chem Systems, a market research firm based in Tarrytown, N.Y.
However, some analysts believe Chem Systems' forecast is conservative. One analyst forecasts global benzene growth at 3.5%, with stable operating rates at about 73% through the end of this year. This analyst points to added capacity in Asia and the Middle East, which, he believes, will feed planned expansions and new derivative plants and keep prices from taking hold. The Middle East expansion centers around Chevron's and Saudi Industrial Venture Capital Group's 50:50 joint venture to build a 482,000 ton/yr benzene plant in Al-Jubail, Saudi Arabia. Completion of the plant is expected this year.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
