Contracts could rise with oil feedstocks
By Staff -- Purchasing, 10/7/1999
Benzene contracts have been in decline for the past year, but recent increases in crude oil and gasoline feedstocks affect prices."The problem that has plagued benzene and other aromatics is the volatility in the price of crude oil and gasoline," says Richard Sleep, an analyst with Tarrytown, N.Y.-based ChemSystems, Inc. "While consumption of benzene has been reasonable in the U.S., it has been poor in other parts of the world. Producer margins have been squeezed and there have been several plant shutdowns," Sleep says. "In addition, there is incremental capacity additions scheduled to come on line in fourth-quarter '99 and first-quarter '00 that will keep the current situation from changing much in the next year."
"The current situation for benzene is different from the ratios we have held as true in the past," says Mary Stewart, an analyst with PACE Consultants, Inc., a market analysis firm based in Houston, Texas. "It's a real funny market for benzene right now," says Stewart. "Prices have been running lower than usual--at parity with toluene. One reason for this," Stewart says, "Is that the market for toluene is being driven up, mainly by toluene disproportionation and a drive for increased paraxylene production. This will begin to push up benzene prices," she says.
Buyers who responded to Purchasing's exclusive monthly chemical price transaction survey place current benzene prices at about 70¢/gal for contracts and about 80¢/gal for spot tags. Buyers forecast that prices will increase little in the coming months. Average prices of 72¢/gal are forecast for contracts and spot tags through the first quarter of 2000.
Buyers predict that average prices of benzene contracts and spot tags six months from now will be at 72¢/gal. Buyers expect benzene prices to weaken prices for all aromatics, but especially for mixed xylenes and toluene.
Data from PACE runs contrary to Purchasing's monthly survey of chemical buyers. 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 74¢/gal for the third quarter of last year. Gulf Coast prices then increased to 79¢/gal in the fourth quarter before falling back to 74¢/gal in the first quarter of this year. According to PACE's data, benzene contracts then increased to about 81¢/gal in the second quarter and reached as high as 85¢/gal in the third. PACE forecasts some slight price slippage (to 83¢/gal) in the fourth quarter of this year.
PACE predicts that annual domestic benzene production will increase from 2.23 billion gal/yr in 1998 to 2.35 billion gal/yr by the end of this year. By the end of next year, PACE expects domestic production to total more than 2.45 billion gal/yr.
Some capacity expansions are on the horizon. In the Middle East, Chevron Chemical and Saudi Industrial Venture Capital Group have entered a 50:50 joint venture to build a 482,000 ton/yr benzene plant in Al-Jubail, Saudi Arabia. Completion of the plant is expected later this year.
Also, two expansions are scheduled to take place in Belgium. BASF and Fina Chemical, Paris, France, are adding 260,000 tons/yr and 250,000 tons/yr of capacity to their benzene production units there in 2000.
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
Now Playing:
