Asia’s benzene market was on a tumultuous ride in the first half of 2025, marked by erratic price swings, shifting trade flows and deepening global economic uncertainty. As geopolitical frictions and structural overcapacity of major derivatives across key regions continue to reshape the trading landscape, players are bracing for persistent volatility in the second half of the year.

Trade Tensions and Economic Strains Rattle Downstream Demand

At the heart of the disruption lies the fragile trading relationship between the U.S. and China. Long-standing political frictions have compounded economic pressures, particularly on the petrochemical value chain. Derivative markets dependent on benzene, such as styrene monomer (SM), phenol and acetone, have faced diminishing demand as buyers hold off amid policy uncertainties, inventory overhangs and weak exports.

What was once a dependable pattern—South Korean benzene flowing into the U.S. ahead of the summer driving season—broke down completely in 2025 so far. In the first quarter, South Korea shipped just 53,663 metric tons of benzene to the U.S., a mere one-sixth of the 338,367 mt exported during the same period in 2024. With price spreads between the two regions unable to offset high freight rates and a 10% U.S. tariff levied on Korean material, the arbitrage window has remained firmly shut since February.

Transatlantic Trade Route Reversed

In a rare turn of events, Europe-origin benzene found its way into Northeast Asia earlier this year, with approximately 60,000 mt of cargo loaded in April reportedly heading to China for June arrival. This shift reflects highlights sluggish downstream demand in Europe, driven by plant outages and extensive maintenance activity. As a result, Europe’s benzene market experienced a supply overhang, prompting increased exports to both the U.S. and Asia.

The European industry, already grappling with ageing assets and elevated energy costs, exacerbated by the post-pandemic recovery and ongoing geopolitical tensions, faces mounting pressure for rationalization. Regional operators have long warned of a “new normal”—one characterized by low operating rates and heightened imports from newer, more efficient plants in Asia and the U.S.

Trinseo’s announcement in late 2023 to shutter its SM plant in Terneuzen, Netherlands, exemplifies this restructuring wave. The closure is part of a broader profitability overhaul aimed at saving $100 million annually. Thereafter, Trinseo will rely on third-party SM purchases to support its downstream production.

LyondellBasell and Covestro have agreed to permanently shut down their joint propylene oxide/ SM unit, known as PO11, located at the Maasvlakte facility in the Netherlands. The site, operating as a joint venture in the Rotterdam area since 2003, will undergo a phased decommissioning. LYB plans to initiate a safe shutdown process and prepare the unit for dismantling by the end of 2026.

More recently, INEOS Phenol announced its plan to cease operations at its Gladbeck, Germany, phenol plant amid high energy costs and carbon tax burdens. Other benzene downstream plant closures and further consolidation is expected to persist throughout 2025 and beyond.

North American Weakness Further Shifts Trade Routes

Across the Atlantic, benzene fundamentals in North America are similarly shifting. While less pronounced than in Europe and Asia, North America is also seeing a broader trend of industry consolidation and shrinking profit margins. INEOS Styrolution said it will permanently close its SM facility in Sarnia, Ontario, which has been idle since April 2024. The shutdown, driven by environmental considerations, is expected to be completed by early Q4 2025.

Meanwhile, mounting regulatory pressure is adding to the strain. The U.S. Environmental Protection Agency has begun a formal risk assessment of SM under the Toxic Substances Control Act (TSCA), which could result in declining SM consumption. Subsequently, benzene demand might decline, diminishing North America’s competitiveness as a benzene export hub to Asia.

With the U.S. market no longer viable, South Korea has pivoted towards China. In Q1 2025, South Korean benzene exports to China surged to over 1.02 million mt—nearly double the 563,000 mt recorded in the same period of last year. While May shipments dipped 24% from April on a monthly basis, the year-on-year comparison remained robust, with May 2025 volumes at 179,740 mt versus just 86,964 mt in May 2024, according to data from Korea International Trade Association.

China’s Outlook Brightens Despite Structural Challenges

Earlier this year, China’s benzene demand was strong, supported by healthy downstream consumption and stable plant operating rates. However, escalating trade tensions with the U.S., a slowdown in the property sector and cautious consumer spending have made it difficult for end-users to move finished goods. Now, signs suggest the market may be shifting.

Government subsidies have started to stimulate domestic consumption, with May retail sales marking the fastest year-on-year growth since late 2023. Household appliance sales surged 53%, while communication devices rose 33%. Although automobiles and construction-related goods underperformed, these, too, showed signs of recovery. These markets are key downstream outlets for benzene, offering some hope of a sustained demand revival in the second half.

Price Volatility Clouds Market Direction

Despite improving demand indicators, traders remain hesitant to take firm positions due to persistent price volatility in the wake of mercurial upstream movement. Spot benzene prices have been on a jagged trajectory since late February, with a rebound in mid-May proving short-lived before another dip, followed by a partial recovery in mid-June. This unpredictability has created a highly cautious trading environment, with participants focusing on short-term windows rather than strategic planning.

“Volatility is the only certainty in this market,” noted a Singapore-based trader. “We’re seeing wild swings driven by sentiment, arbitrage shifts and macro factors — but very few fundamentals to anchor positions.”

What Lies Ahead?

Looking forward, the Asian benzene market remains highly exposed to both structural shifts and macroeconomic headwinds. Demand rationalization in Europe and North America will dampen long-term support, while excess derivative capacity in China and fragile global demand will continue to cap price upside.

With the U.S. increasingly insulated, Europe rebalancing and China recalibrating its domestic economy, trade flows are being redrawn in real time. Deep-sea arbitrage windows may open briefly—but few are counting on sustained opportunities.

Until a new global equilibrium emerges, Asia’s benzene market is likely to stay on its roller coaster ride, with volatility the defining theme for the rest of 2025.