Asian benzene price soaring may stop in March

Crude oil prices having reached a peak of US$130 in July 2014 fell dramatically to less than US$30 a barrel in the last 52 weeks and are again hovering at their 52 weeks peak at around US$52-53 a barrel since January this year. Having seen this, nylon feedstock, – benzene prices reacted to this peak and trough coupled with tight availability. This was driving nylon prices in recent weeks, nylon via caprolactum via benzene. Nylon is seeing some demand movement, but its season will come to an end and the rise will tame soon. Nylon derived support from both, cost side as well as demand side.

In March, crude oil markets will undergo weak correction given the production push in US as drillers add more oil rigs while record stockpile will weigh on the market. Although OPEC pledged to cut output, supply will be reduced slowly and steadily. Thus, the glut will remain for some time.

For benzene, March will not be a repeat of the triple digit increases of January and February. Spot prices in Asia will tread below the quasi normal US$1,000 a ton mark. There were signs of weakness in end February on lower regional demand and prices were mostly on a downtrend in the last week. March does however, appear more stable, but prices will still be at high level but may tend to fall. However, significant declines are not anticipated until April-May.

Derivative, caprolactum prices after rising terribly in last three months rising more than US$700 a ton will partially retreat in March. Spot will become less active going into March with raw material shortages (cyclohexanone) easing and air pollution levels decreasing in China, allowing production to expand