Bearish Benzene Prices Drive Down MCB and PNCB Rates, But Demand Uptick Expected Soon

Key Takeaways:

• Price Trends: Domestic MCB and PNCB prices have dropped, driven by falling feedstock benzene prices.
• Supply & Demand: Recovery in India’s MCB and PNCB demand is expected post-Diwali in November.
• Global Market: Benzene prices in the Asian market are in backwardation, showing slight week-on-week increases.

Chemicals Prices: MCB and PNCB Prices Decline

• In the domestic market, prices for Mono Chloro Benzene (MCB) and Para Nitro Chloro Benzene (PNCB) have undergone a price correction, primarily due to the bearish trend in feedstock benzene prices.
• Domestic manufacturers are offering MCB (tanker load) in the range of ₹67-68 per kg (Ex-Ankleshwar), while PNCB is priced at ₹100 per kg (Ex-Ankleshwar), both on an advance payment basis.
• Traders are offering MCB at ₹68.50 per kg (Ex-Ankleshwar) on 30 days credit terms, and PNCB at ₹102 per kg (Ex-Ankleshwar). Both MCB and PNCB prices have seen a month-on-month decline of approximately ₹5 per kg.
• Feedstock benzene prices in the Asian market (FOB Korea benchmark) are in backwardation, though there has been a week-on-week increase:
• FOB Korea 2H Oct Benzene: $915/MT (up $5)
• FOB Korea 1H Nov Benzene: $890/MT (up $16)
• FOB Korea 2H Nov Benzene: $891/MT (up $15)
• FOB Korea 1H Dec Benzene: $886/MT (up $14)
• FOB Korea 2H Dec Benzene: $885/MT (up $14)

Chemicals Supply & Demand: Agrochemical Sector Drives MCB and PNCB Demand in India

• India's demand for Mono Chloro Benzene (MCB) stands at approximately 100 kt per annum. Major domestic manufacturers include Aarti Industries, Bodal Chemicals, Hemani Group, Seya Industries, Panoli/Kutch Chemicals, and Chemi Organics. About 68% of MCB is consumed captively for producing derivatives like PNCB, ONCB, MNCB, and 2,4 DNCB.
• For Para Nitro Chloro Benzene (PNCB), the Indian demand is around 50 kt per annum. Domestic manufacturers produce nearly 40 kt, while an additional 8-10 kt is imported from China. The primary consumers of PNCB are:
• Agrochemicals, consuming 25 kt (50% of demand)
• Dyes and Pigments, consuming 16-17 kt (35% of demand)
• Pharmaceuticals, consuming 5 kt (10% of demand)
• Rubber Chemicals, consuming 2-3 kt (5% of demand)
• Seasonal demand for PNCB from the agrochemical sector remains strong, though demand from dyes, pigments, and pharmaceuticals has slowed down due to reduced production rates. However, market participants expect demand to pick up after the Diwali holidays in November, with a robust recovery anticipated.
• Rebounding benzene prices are likely to create positive market sentiment for MCB and PNCB in the short term.

Chemical News: Impact of Global Shutdowns on Supply and More

• In international markets, upstream crude oil benchmark WTI prices have decreased by 0.66% to $71.26 per barrel, and natural gas prices have decreased by 0.61% to $2.29/MMBtu.
• CIF India offers for PNCB arrivals from China in November are at $1,250/MT.
• ZPC has reduced operating rates at its Styrene Plant and also planning to shut soon. The Plant is located in Zhejiang, China with a production capacity of 600,000 Tons/Year.
• Long Son Petrochemical is aiming to shut its Butadiene (BD) Unit with Cracker in end-October/early-November, 2024. The Unit is located in Long Son, Vietnam with a production capacity of 110,000 Tons/Year.
• Yeochun NCC (YNCC) is planning to shut its No.2 Cracker in October, 2024 for maintenance work until November, 2024. The Cracker is located in Yeosu, South Korea with Propylene production capacity of 590,000 Tons/Year and Ethylene capacity of 915,000 Tons/Year.

Explore more industry updates and Chemicals news here!

Expert Opinion on Chemical Market Trends

MCB and PNCB prices are expected to remain bearish this week due to weak downstream demand. However, with rebounding benzene prices and anticipated post-Diwali demand from the agrochemical and pharmaceutical sectors, buyers should consider taking advantage of inventory opportunities during price dips.