US benzene production increased moderately to 101,760 b/d for the week ending June 20, a Platts analysis showed. The small increase in supplies came amid higher refining throughput, with the biggest jump in crude utilization occurring in the Gulf Coast, according to data released by the Energy Information Administration on Wednesday.
Total benzene demand was estimated by Platts at 138,670 b/d for the corresponding week. As a result, it is estimated that the US market was in a short 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 the prior week when the shortage was estimated at 37,660 b/d. However, the estimated shortfall is far greater than the two months prior average when the supply deficit was estimated around 32,390 b/d.
The estimated deficit is derived prior to taking into account benzene imports. However, benzene imports were just over 85,000 b/d in April and around 75,000 b/d in March, data from the US International Trade Commission showed. 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 as gasoline demand increases, which drives up reformate supply and reformate is a key feedstock for benzene. The shortage is forecast to drop to just under 35,790 b/d in July as forecasted refining run-rates reach their highest level on summer driving demand. Looking ahead, the supply deficit should begin increasing in October as crude utilization slows along with petrochemical utilization.
PRICES SURGE
USGC benzene prices continued rising over the last week, hitting a five-month high Tuesday and nearing record highs, while downstream benzene markets 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 Gulf Coast, based on Platts data. US spot pricing was last seen above this level January 17, when assessed at $5.47/gal FOB USG, Platts data showed. Spot has risen 90 cents/gal ($269.10/mt) since June 4.
Sources have attributed recent gains to production hiccups, which are contributing to limited supply availability.
July benzene contracts could settle above $5/gal because of higher benzene pricing during June, sources said.
Market participants said prices could head even higher during the end of June, but anticipate lower prices in July as imports arrive from other regions and as production issues end.
MARGINS IN GREEN
Reforming margins remain strong on the Gulf Coast as the naphtha and reformate delta stands at a profitable level. Reformate demand should remain strong in the summer in connection with gasoline demand. Reformate run-rates have 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 MSTDP over the past month. Aromatics extraction margins were at $59.72/mt on Tuesday, climbing out of the doldrums and doubling from where they stood a month ago. The TDP margin was at $218.70/mt, while the MSTDP margin was at $67.92/mt.
