Sinopec Cuts Benzene Price for Second Time in Three Days
Sinopec lowered its domestic benzene list price by 300 yuan per metric ton ($44/mt) to 7,100 yuan/mt ex-warehouse on Wednesday, equivalent to about $906/mt CFR China on an import-parity basis. This extends a recent downward trend amid steep losses in regional benzene and domestic Chinese markets, according to industry sources.
The latest reduction follows a 300 yuan/mt cut on Monday, when Sinopec lowered its benchmark to 7,400 yuan/mt ex-warehouse. Wednesday’s move marked the sixth consecutive price cut since May 8, when the company first reduced its benzene list price to 8,500 yuan/mt ex-warehouse. Cumulative reductions now total 1,750 yuan/mt over the period.
Domestic prices have continued to weaken alongside broader market sentiment. Since Sinopec’s previous adjustment on Monday, the midpoint of the OPIS domestic China benzene assessment fell 1.43% from 7,325 yuan/mt ex-tank to 7,220 yuan/mt ex-tank by Tuesday.
The decline has been driven largely by sharp losses in upstream energy markets. Crude oil and naphtha prices have retreated on expectations that a potential U.S.-Iran agreement to reopen the Strait of Hormuz could restore disrupted energy flows and ease feedstock shortages that had supported petrochemical markets earlier this year.
Market participants said the prospect of additional crude, condensate and naphtha supply returning to the market has encouraged expectations that Asian refiners and steam crackers will gradually raise operating rates after previous production cutbacks, potentially increasing benzene availability in the months ahead.
“Benzene is trading more on future supply expectations than current fundamentals,” said a Southeast Asia-based trader. “The market is assuming refiners will bring back run rates once feedstock availability improves, so buyers are adjusting prices lower ahead of that.”
At the same time, benzene demand has weakened across several downstream sectors. Derivative producers have faced mounting pressure from softer end-user demand, elevated inventories and compressed production margins, reducing feedstock purchasing appetite.
The downturn has been reflected in regional spot markets. Benzene weekly averages have declined for six consecutive weeks, with the OPIS FOB Korea weekly average falling from $1,121/mt during the week ended April 30 to $972/mt by June 12, representing a 13% decline.
Despite the bearish sentiment, some market participants cautioned that physical fundamentals remain tighter than price action suggests.
Benzene inventories in East China have continued to draw down rapidly, falling from 170,000 mt during the week ended May 29 to 131,000 mt by June 12, according to data from Chemical Market Analytics by OPIS. The decline reflects reduced import arrivals and earlier production cutbacks across Northeast Asia.
The inventory draw has created a divergence between prompt physical balances and forward market expectations. While traders broadly anticipate supply conditions will improve if Middle Eastern energy flows normalize, current spot availability for July remains relatively tight.
“There is still a gap between what the market expects and what is physically available today,” added the trader. “Inventories are falling and July supply is not particularly long, but prices are reacting to expectations that supply will recover in the coming months.”
Market participants said benzene prices are likely to remain under pressure in the near term as long as crude oil and naphtha markets continue to weaken. However, the pace of any further declines may be limited if inventory draws persist and regional producers are slower than expected to restore operating rates.
For now, sentiment remains dominated by expectations of a supply recovery rather than current market tightness, leaving benzene vulnerable to further volatility as traders monitor developments surrounding the Strait of Hormuz and the broader Middle East energy market.
—Reporting by Hazel Kumari, hkumari@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com