Market and product
US benzene supplies climbing as refinery runs increase
Total benzene demand was estimated by Platts at 138,670 b/d for thecorresponding week. As a result, it is estimated that the US market was in ashort position of roughly 36,910 b/d for the week ending June 20.
The supply deficit for the week ending June 20 is slightly less than theprior week when the shortage was estimated at 37,660 b/d. However, theestimated shortfall is far greater than the two months prior average when thesupply deficit was estimated around 32,390 b/d.
The estimated deficit is derived prior to taking into account benzeneimports. However, benzene imports were just over 85,000 b/d in April andaround 75,000 b/d in March, data from the US International Trade Commissionshowed. May benzene trade data will be released by the USITC on July 3.
The current benzene deficit is expected to fall over the summer months asgasoline demand increases, which drives up reformate supply and reformate is akey feedstock for benzene. The shortage is forecast to drop to just under35,790 b/d in July as forecasted refining run-rates reach their highest levelon summer driving demand. Looking ahead, the supply deficit should beginincreasing in October as crude utilization slows along with petrochemicalutilization.
PRICES SURGE
USGC benzene prices continued rising over the last week, hitting afive-month high Tuesday and nearing record highs, while downstream benzenemarkets continued to be pressured higher.
US spot benzene pricing rallied 24 cents/gal ($71.83/mt) Tuesday,reaching a five-month high assessment at $5.35/gal ($1,601.25/mt) FOB US GulfCoast, based on Platts data. US spot pricing was last seen above this levelJanuary 17, when assessed at $5.47/gal FOB USG, Platts data showed. Spot hasrisen 90 cents/gal ($269.10/mt) since June 4.
Sources have attributed recent gains to production hiccups, which arecontributing to limited supply availability.
July benzene contracts could settle above $5/gal because of higherbenzene pricing during June, sources said.
Market participants said prices could head even higher during the end ofJune, but anticipate lower prices in July as imports arrive from other regionsand as production issues end.
MARGINS IN GREEN
Reforming margins remain strong on the Gulf Coast as the naphtha andreformate delta stands at a profitable level. Reformate demand should remainstrong in the summer in connection with gasoline demand. Reformate run-rateshave historically peaked in July, according to EIA data.
The spike in benzene prices has helped margins for aromatics extraction,as well as on-purpose benzene production from processes such as TDP and MSTDPover the past month. Aromatics extraction margins were at $59.72/mt onTuesday, climbing out of the doldrums and doubling from where they stood amonth ago. The TDP margin was at $218.70/mt, while the MSTDP margin was at$67.92/mt.
