USGC benzene prices hold at four-year highs on octane strength, tight supply

US Gulf Coast benzene spot prices held steady at a more-than-four-year high on Sept. 16, driven by tight domestic supply and strong octane demand that traders say is unlikely to ease, even as modest import volumes are expected to arrive in October.

Platts, part of S&P Global Energy, assessed prompt-month DDP benzene at 551 cents/gallon on Sept. 15, the highest level since July 7, 2022, when the price stood at 549 cents/gal, and the price remained unchanged at that level on Sept. 16.

The rally has reflected sharp increases so far this month; since Sept. 1, prompt benzene has risen 85 cents/gal, or 18.2%, from 466 cents/gal, according to Platts data.

The broader price surge traces back to early March, when the effective closure of the Strait of Hormuz following the outbreak of the Middle East war upended global refined products trade flows.

Since March 2, prompt benzene has climbed 236 cents/gal, or 74.9%, from 315 cents/gal, according to Platts data. The closure of the Strait has disrupted supply chains and contributed to supply tightness across global markets.

Octane pull on benzene

Multiple factors are pushing USGC benzene prices higher, as octane values have hit multi-year highs and available benzene volumes remain limited.

Market participants said the combination of strong gasoline fundamentals and limited domestic supply has spurred price hikes in the market.

One benzene trader attributed the rise to pull from the octane market and tight supply, adding that expected imports are unlikely to ease prices if gasoline prices remain strong.

A second market source also pointed to the timing of the monthly contract price window as a catalyst for the latest benzene price increase.

"It seems that some sellers and buyers were holding until the [10-day] contract price window started, and there was a jump up on benzene," the second source said. "Availability should be limited with the turnarounds on schedule, and certainly demand is there for the octane boosters."

Ethylbenzene, a key benzene derivative and octane booster, has also pointed to continued tightness.

"On the octane front, I expect [ethylbenzene] to continue to roar, supportive gasoline fundamentals, lack of import penetration, refineries prioritizing distillates, Middle East dynamic, Russia/Ukraine dynamic, all poised to play a significant role in the structural tightness we see with refined products," a styrene source said.

Around 24,000-25,000 metric tons of benzene are expected to arrive in the USGC in October, according to a third market source.

However, traders broadly said that incoming import volumes are unlikely to provide meaningful price relief as long as gasoline and octane values remain elevated.

Platts assessed October USGC benzene at 537 cents/gal DDP on Sept. 16, according to Platts data.