Group 1 - The core viewpoint is that despite short-term volatility, the price spread between benzene and naphtha is expected to return to a reasonable range in the long term, contingent on low benzene inventories in the U.S. [1] - Southeast Asia is anticipated to become a major source of benzene exports due to new production capacity, posing a challenge to Northeast Asia's traditional export status [1] - The price of benzene has seen significant fluctuations, dropping from an average spread of over $300/ton to around $150/ton, raising concerns about the future of the benzene industry [1] Group 2 - Historical data shows that the peak price spread between benzene and naphtha exceeded $500/ton, primarily driven by surging gasoline demand in the U.S. [1] - The price spread is projected to maintain between $160 and $250/ton by the end of 2026, indicating a reasonable range of fluctuations, although market volatility is expected to persist [1] - Northeast Asia remains the largest benzene exporter, but the shutdown of cracking facilities in South Korea and Japan is accelerating capacity consolidation [2]

Core Viewpoint - The European benzene market is facing structural demand weakness and local supply surplus, leading to a pessimistic outlook for the market through 2025 [1][2][4] Group 1: Market Conditions - The benzene and its derivatives industry is experiencing a significant downturn due to weak demand from the automotive and construction sectors, with procurement volumes for key derivatives like isopropyl benzene, styrene, and cyclohexane continuously declining [2] - As of August 15, the average spot price for benzene in the ARA region was $763.95 per ton, down 19% from the second half of 2024 and 27% from the average price in 2024, indicating a sustained low price environment [2] - The ongoing supply surplus is suppressing prices, leading to a slight tightening of local supply as production economics worsen [2] Group 2: Trade Impacts - Geopolitical tensions, particularly the Russia-Ukraine conflict and Middle Eastern instability, have caused oil price volatility, further complicating the European benzene market [3] - The imposition of a 15% tariff on EU products by the U.S. has exacerbated the local supply surplus, making exports to the U.S. unprofitable, with losses estimated at $5 to $15 per ton for European benzene exports [3] - The traditional export-import dynamics between Europe and the U.S. are expected to be disrupted, necessitating price adjustments on both sides to restore balance [3] Group 3: Future Outlook - Market participants are generally pessimistic about the benzene market's prospects, with expectations of no significant improvement in the fourth quarter of this year, shifting focus to 2026 [4] - Despite potential short-term boosts from U.S. import arbitrage, the ongoing weakness in the automotive and construction sectors in Europe limits the recovery of related chemical product demand [4] - Long-term recovery is contingent upon capacity adjustments in Europe, with industry insiders suggesting that substantial impacts from capacity reductions will take years to materialize [4]

Core Viewpoint - The European benzene market is facing structural demand weakness and local supply surplus, leading to a pessimistic outlook for the market through 2025 [1][2][4] Group 1: Market Conditions - The European benzene market is dominated by oversupply, primarily due to the ongoing downturn in the automotive and construction sectors, resulting in weak demand for raw benzene and its derivatives [2][3] - As of August 15, the average price of benzene in the ARA region was $763.95 per ton, down 19% from the second half of 2024 and 27% from the average price in 2024 [2] - The economic viability of benzene production is deteriorating, leading to a slight tightening of local supply [2] Group 2: Trade Dynamics - Geopolitical tensions, such as the Russia-Ukraine conflict and Middle Eastern instability, have caused significant volatility in oil prices, impacting the European benzene market [3] - The imposition of a 15% tariff on EU products by the U.S. has exacerbated the oversupply situation in Europe, making exports to the U.S. unprofitable [3] - Current data indicates that European exports to the U.S. are incurring losses of $5 to $15 per ton, limiting arbitrage opportunities [3] Group 3: Future Outlook - Market participants are generally pessimistic about the benzene market's prospects, with expectations of no significant improvement in the fourth quarter of this year [3][4] - The focus is shifting towards 2026, as the ongoing weakness in the automotive and construction sectors continues to hinder demand recovery [3] - Long-term recovery may require significant capacity reductions in steam cracking facilities, which could take years to manifest in the market [4]

Supply Situation - Global benzene production capacity has shown a distinct pattern of slow growth followed by rapid expansion, with an average annual growth rate of less than 2% from 2015 to 2019, increasing to 5% from 2020 to 2024, resulting in a capacity increase from 69.3 million tons per year to 83.3 million tons per year, a 20% increase. However, growth momentum has begun to slow down entering 2024 [1] - North America and Western Europe rank second and third in global benzene production capacity, each exceeding 10 million tons and accounting for approximately 12% of global capacity. Refining companies in these regions have faced constraints due to policy impacts and demand shrinkage, leading to the gradual elimination of some facilities [1] - Northeast Asia dominates global benzene production capacity, with an estimated capacity of 42.2 million tons per year by the end of 2024, accounting for 50.7% of global capacity, with China contributing 25.73 million tons per year [1] Demand Situation - Global benzene demand has consistently grown since 2015, with a notable decline only in 2020 due to the COVID-19 pandemic. From 2020 to 2024, global benzene consumption is projected to increase from 50.17 million tons per year to 65.20 million tons per year, a total growth of 30%, with a year-on-year growth rate exceeding 10% in 2023 [7] - The primary demand regions for benzene are Northeast Asia, North America, and Western Europe, with their respective demand shares being 60%, 13%, and 10% by the end of 2024. In Northeast Asia, benzene consumption is expected to rise from 27 million tons in 2020 to 39.2 million tons in 2024, increasing its global share from 54% to 60% [7] - The largest application of benzene globally is for the production of styrene, accounting for 49% of usage, followed by isopropylbenzene at 21% [8] Trade Flow - In 2024, the global benzene trade flow has not changed directionally compared to the past five years, although some regional circulation volumes have shifted. The most active trade involves Asian exports to China and arbitrage between Northeast Asia and North America [10] - Northeast Asia is a key hub for benzene trade, with significant intra-regional trade among China, South Korea, and Japan. North America is a net importing region, primarily sourcing imports from Northeast Asia [12] China Trade Dynamics - China is the largest consumer and importer of benzene globally, with imports rising steadily from 2020 to 2024. The majority of imports come from neighboring Asian countries, with around one million tons entering Jiangsu for redistribution to downstream users [13] - From 2015 to 2018, China's benzene imports grew from 1.205 million tons to 2.57 million tons, with the import dependency rising from 13.3% to 23.7%. This increase was driven by domestic demand outpacing local production growth [14] - In 2019, imports dropped to 1.939 million tons, a 24.6% decrease, due to increased domestic production capacity and reduced international prices [15] - From 2020 to 2024, imports are expected to exceed 4.2 million tons, with an average annual growth rate over 20%, driven by strong domestic demand and increased exports from South Korea [17] Import Characteristics - China's benzene imports are highly reliant on neighboring Asian countries, with South Korea being the largest supplier, followed by Brunei, Thailand, Malaysia, and Singapore [19] - In 2024, Zhejiang province is projected to import 1.5262 million tons, accounting for 35.4% of national imports, followed by Shandong and Shanghai [22][23]