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SunSirs: Chemicals, Pure Benzene Continued to Rise but the Rise Slowed Down (April 13-19, 2020)

April 20 2020 10:18:49     SunSirs (Selena)

According to the data of SunSirs' bulk list, last week's price of pure benzene continued to rise, but the rise slowed down; the focus of negotiation fell in the near weekend. On April 12, the price of pure benzene was 2,850-3,800 RMB/ ton (average price 3,180 RMB/ ton), and last weekend (April 19), the price of pure benzene was 3,000-3,900 RMB/ ton (average price 3M350 RMB/ ton), 5.35% higher than the previous week.

Analysis and Comment

Product: after the previous week's bottom reading, the market speculation started last week slowed down significantly. Last Tuesday, Sinopec's listing price of pure benzene was increased by 150 RRMB/ ton, to 3,050 RMB/ ton. East China's port inventory continued to accumulate. Last week, the downstream factories in the north were active in purchasing, the spot supply in the market was insufficient and the price was high. The East China Shandong arbitrage window opened to support the pure benzene market.

Outside: on Friday (April 17), benzene imported from South Korea was $345.67 / ton, up $27.34 / ton, up 8.59% from April 10; East China imported $372 / ton, down $4 / ton, down 1.06% from April 10.

Crude oil: OPEC+ oil producing countries finally reached the largest production reduction agreement in history, but the strength was not as expected by the market, unable to offset the impact of public health events on demand collapse. Last week investors returned to reason after a brief "euphoria" over the agreement to cut production and crude oil fell back. Brent fell $3.59, or 15.13%, last week from April 9, while WTI fell $3.79, or 13.15%. Compared with December 31, 2019, Brent decreased by 69.83% and WTI by 58.81%.

Downstream industry: last week, the market price of styrene fell, and the rising sentiment in the market dissipated. Most domestic enterprises reduced prices and promoted sales to maintain stable shipment. On Friday, Shandong's price was 5,150 RMB/ ton, down 0.64% from the previous week.

Stimulated by the sharp increase in cost, the downstream enterprises of aniline stepped up their stock preparation; the inventory of aniline enterprises was cleaned up, and the price rebounded. On last Friday, Shandong's price was 5,500 RMB/ ton, while Nanjing's price was 5,600 RMB/ ton, with a weekly increase of 9.93%.

Market Forcast

Crude oil: it is predicted that the world crude oil consumption will shrink by 20 million barrels/ day in 2020. If demand collapses, without strong intervention from the supply side, it will be difficult for oil prices to strengthen. Moreover, the short-term agreement on production reduction cannot offset the negative impact of the sharp contraction of demand, and the oil market cannot get rid of the dilemma of excess supply and demand. In addition, crude oil consumption enters into the off-season from April to May, and seasonal factors will aggravate the imbalance between supply and demand in the oil market, thus making the oil price face the risk of downward.

Market: East China - Shandong arbitrage open, East China region source of goods into Shandong, or inhibit its price. At the same time, the support of pure benzene was weakened. It is expected that the purchase of pure benzene will return to light in the later stage. Downstream styrene just purchase by need.

It is expected that pure benzene will go down next week, but not much.


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