The US benzene deficit fell nearly 1,000 b/d to roughly 30,000 b/d as US refining utilization rates hit 91.4% in the week ending June 27, Platts analysis shows.
Benzene supplies from refineries were estimated at 53,860 b/d, petrochemical supplies at 18,700 b/d and on-purpose supplies such as MSTDP and TDP were 25,302 b/d, according to Platts data. Meanwhile, demand was 131,640 b/d, the data show.
The tight market should continue to receive relief over the next month as styrene units pull back on their benzene demand and refinery utilization hits seasonal highs.
It is anticipated that styrene unit utilization rates will dip to around 75% towards the end of July, sources say. Styrene production is the largest demand source for US benzene at roughly 62,000 b/d.
Marginal benzene supplies will also come out of the Gulf Coast with Chevron's reformer at Pascagoula, Mississippi, heard to be coming back online from an unplanned outage.
The 57,300 b/d reformer has been shut for at least 10 days, according to sources. The unit is estimated to produce about 50,000 b/d of reformate, of which 5.8% is benzene.
Finally, several vessels are making their way to the US from Europe and Northeast Asia. At least three vessels should land in the US market from Northwest Europe by mid-July. In addition, up to 50,000 mt of benzene was heard to be heading to the US from Asia. In total, the waterborne imports should balance the market for up to 16 days, according to estimates.
The benzene deficit, in the absence of imports, is forecast to sit around 28,000 b/d through August, but should start to widen in the fourth quarter as reformers go offline for planned maintenance. The deficit is expected to be around 32,230 b/d in October, the peak forecast deficit in 2014.
PRICES EASE SLIGHTLY FROM RECORD HIGH
The US benzene contract price for July settled at $5.28/gal ($1,580.30/mt) late Monday, sources said Tuesday.
The settlement represented a record high, according to Platts data, after registering a gain of 80 cents/gal compared with June's $4.48/gal CP.
Market participants anticipated the higher settlement because of spot price increases during June. Prices were assessed as high as $5.35/gal FOB US Gulf Coast. The spot market gains were due to limited supplies during June.
Supplies initially tightened because of an increase in downstream styrene demand as well as fewer imports from other regions in May due to unattractive arbitrage opportunities, sources said.
Spot USGC benzene was heard offered at $5.20/gal on Wednesday, down from a $5.28/gal assessment on Tuesday.
MARGINS SURGING
US Gulf Coast reforming margins have surged over the past month as the naphtha and reformate delta widens. The reforming margin stood at $57.84/mt on Tuesday, up from $14.74/mt a week prior.
The aromatics extraction margin has also surged on high aromatic values. The margin was $47.76/mt on Tuesday, up from $7.14/mt on June 24. High reforming and aromatics margins are an incentive for refiners to run their reformer and aromatics units at full rates.
On purpose benzene production methods such as TDP and MSTDP were softening from last week though as the toluene and benzene delta narrowed. The TPD margin was $153.25/mt on Tuesday and the MSTDP margin was $56/mt. However, TDP and MSTDP units were forecast to be running at around 90% of capacity.
