The domestic pure benzene market, which has experienced a decline in the past two months, began to bottom out and stabilize in late June, and some areas have shown signs of bottoming out. As of June 25, the listing price of Sinopec pure benzene in various places showed 6,200 yuan (ton price, the same below), a drop of 16% within two months, a new low for the year. Industry insiders believe that pure benzene has a high probability of bottoming out and stabilizing, and the market can still be expected in the second half of the year.
"Since the second quarter of this year, the downward momentum of pure benzene in the process of supply and demand game has been released, and the market has gradually stopped falling and stabilized. It is expected that the price of pure benzene is expected to form a phased low, and the market outlook is promising." Henan trader Yan Shaoqi said so .
Demand support stops falling and stabilizes
According to the statistics of Henan Chemical Industry Network, as of June 25, except for phenol, which is still in a loss state in the main products of the downstream industrial chain of pure benzene, the profit per ton of styrene, aniline, caprolactam and adipic acid are respectively 120 yuan, 3500 yuan, 180 yuan, 180 yuan, in a state of profit, especially styrene products, which account for a large proportion of raw material demand, began to turn from a small loss to a profit in June, which has strong support for the pure benzene market. It is also the main reason for the recent stabilization of the pure benzene market.
Yan Shaoqi said that on the basis of the current relatively stable downstream market of pure benzene, the products of this industry chain performed relatively well in the domestic market, so downstream enterprises were also highly motivated to produce. Since the end of June, the transaction atmosphere in various places has improved significantly, and the supply of low-priced goods has gradually decreased. In recent years, as the proportion of traders participating in the pure benzene market has gradually decreased, the speculative potential has also been greatly reduced. Once the market bottoms out and stabilizes, changes in demand from downstream enterprises of pure benzene will be a key indicator leading the market.
The supply and demand balance can be expected
The data shows that the comprehensive operating rates of styrene, phenol, aniline, caprolactam, adipic acid and other products in the downstream product chain of pure benzene were 67.8%, 69%, 76.5%, 72.5%, and 69% respectively. "Judging from the recent upstream and downstream operations, the supply and demand of pure benzene are basically in a new balance, which is another important factor for the market to stop falling and stabilize. In addition, the inventory of pure benzene in ports has also shown a steady decline, indicating that domestic demand is growing. The bottoming and recovery of the pure benzene market may be expected.” said Li Peixin, Purchasing Director of Jiangsu Dipu Technology Co., Ltd.
A person in charge of sales of Sinopec said that the profits of most downstream products of pure benzene are currently in a state of recovery, mainly due to the drop in the price of pure benzene, which has given up profits to downstream products. Under the current transaction price, the supply and demand of pure benzene are basically balanced, and the demand is even strong, which can be seen from the change of market mentality before the Dragon Boat Festival. Before the Dragon Boat Festival, more than 50% were bearish on the market outlook, and only about 30% were bullish. After the festival, the proportion of optimistic on the market outlook has turned to more than 50%.
There is no difference between inside and outside, and the market has stabilized
Port market information shows that from June 15 to 21, the average price of imported pure benzene CFR China reached 777 US dollars / ton; on June 27, the CFR China average price was 752.5 US dollars / ton, equivalent to RMB 6254. From this point of view, there is basically no price difference between the inner and outer plates of pure benzene, and the ex-factory prices of most domestic enterprises are even lower than the import prices.
"Under the background that there is basically no price difference between internal and external markets, although the price of pure benzene in some enterprises is still slightly lowered, the price of imported goods will form a strong support for the domestic market, and there is little room for the price of pure benzene to decline sharply again. The benzene market bottomed out and stabilized, and the probability of a rebound in the waiting period greatly increased." Shao Huiwen, a senior market commentator, said.
Analysed by industry insiders, it is now a critical moment for the long-short market game. Factors such as the expected growth in demand in Asia, the decline in U.S. commercial crude oil inventories, and OPEC+ production cuts will all form a foundation for the stabilization, bottoming, and repair of pure benzene. However, the slowdown of global economic growth still restrains downstream demand. Although there are signs of increasing supply in Iran and Russia, it is not ruled out that possible factors such as another decline in the price of imported goods will also inhibit the recovery process of the market. It is expected that the pure benzene market will continue to decline in the short term. Mainly based on foundation repair.
It is recommended to actively pay attention to factors such as the increase in the operating rate of downstream units of pure benzene, changes in external prices, and domestic inventory consumption, adjust raw material procurement strategies in real time, control inventory, grasp the market rhythm, and avoid market risks. (Liu Yongming)
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