China Drying Network News China's pure benzene market recently ushered in a round of continuous upswings. On August 24th, Sinopec's pure benzene listing price was raised again by 200 yuan (ton price, the same below) and rose to 8,900 yuan. Since July, the current round has risen by 1,600 yuan, an increase of 22%. PetroChina and other benzene-producing companies also increased their prices simultaneously, setting a new high after the 2008 financial crisis, and this is the first time this year that they have unilaterally increased their prices.
Considering the current market conditions, in addition to factors such as tight raw materials, rising stocks, increasing international supply, and meeting the demand season, the expected increase in new demand this year is another major reason for boosting this round of market conditions. However, under the backdrop of continued favorable market conditions, the market volume has been shrinking since the continuous increase of benzene, and there has been some resistance to the high turnover. Therefore, industry insiders reminded that we should be alert to the high risk, do not rule out the short-term market shock adjustment.
In the second half of the year due to tight raw materials, domestic gasoline and diesel were at a high level for most of the time. Although there were two sharp declines during the period, the overall sales price was still high. For naphtha crackers, the production of pure benzene was not as good as the production of gasoline. With economic benefits, the source of raw materials for petroleum benzene is limited, and output continues to decline. In addition, due to the reduction of coal production, the coking crude benzene resources have been greatly reduced, which has also caused continuous production cuts of coking benzene and hydrogenated benzene. It is understood that the domestic comprehensive operating rate of coking benzene is only about 40%, hydrogenation benzene operating rate is also less than 55%. Some coking benzene and hydrogenation benzene companies are currently shutting down production due to raw material restrictions and high processing costs. Some companies have even converted their production. The factors of tight raw materials have formed a favorable promotion role for domestic pure benzene production enterprises in terms of price.
Depression in stocks has boosted Since April, the domestic pure benzene market has continued to have a low spot volume, while the overall inventory in East China has remained below 20,000 tons. During the two months of May to June, the enthusiasm of market procurement was even lower. In particular, traders basically operated under the condition of “zero inventory†and accumulated sufficient momentum for the tight supply of the market. This caused the price to rise in July, when the market once reached a situation where supply was hard to come by and downstream producers were forced to cut production. In addition, at the beginning of July, the international crude oil market continued to rebound after hitting a new low this year. The mentality of traders and manufacturers has gradually improved, and the speculation has strengthened, which has also boosted the continuous upswing.
International supply reduction It is understood that foreign benzene plants such as South Korea, Japan, and Singapore have partial maintenance plans during the period from August to October. Some large-scale pure benzene plants are under low-load conditions, which reduces the amount of outsourced production in order to increase reserves. This is also one of the reasons for the recent continuous rise in the Asian market. Although domestic imports of benzene increased by 98% month-on-month in July, they were all sources of low prices in the international market in May. Due to the continuous warming of international pure benzene, the difference between internal and external prices has increased, and imports of pure benzene are expected to further decrease. If the international market maintains its current high level, it does not rule out that exports in the latter period will grow again on the basis of an increase of 70% in July. Coupled with the impact of the “Golden 9 Silver 10†peak season in the pure benzene market, advance stocking has become a consensus within the industry and continues to intensify domestic supply, which is another factor in the continued heating up of the domestic pure benzene market in August.
Pulling demand growth According to incomplete statistics, this year's downstream enterprises will increase production capacity and consume about 2.97 million tons of benzene. The manufacturers including downstream styrene, phenol, aniline, cyclohexanone, and adipic acid have so far achieved a total production expansion of 1.92 million tons/year. If all the full capacity starts, the use of pure benzene will increase by approximately 1.66 million tons/year. By the end of 2012, the total capacity of downstream new installations is expected to be approximately 3.52 million tons/year. If all the full-load capacity starts, the use of pure benzene will increase by approximately 2.97 million tons/year. However, as of the end of 2012, the production capacity of petroleum benzene was only 250,000 tons/year, and the total output of hydrogenated benzene is expected to increase by 1.36 million tons/year in 2012. The total production capacity of hydrogenated benzene and petroleum benzene will expand to 1.61 million tons/year. There is a large gap between supply and demand, which is also the medium-term and long-term benefits brought by the substantial increase in downstream consumer expectations.
However, downstream products of pure benzene such as styrene, aniline, phenol, cyclohexanone, and adipic acid have seen general growth in recent days, but the overall lack of transaction volume has been magnified, and the increase has been relatively limited. In addition, some products such as nitrochlorobenzene have experienced a slight decline, and aniline companies have once again approached the cost margin due to the continuous rise of pure benzene, and their ability to support the benzene market began to weaken.
It is also known that starting from September, Yangzi Petrochemical, Panjin Ethylene, Dalian Fujia Dahua will restart, Huachen Energy and Fushun Petrochemical will produce products, and the overall market supply will increase. According to market analysts, market prices continue to lack momentum and the risk of high adjustments has also begun to increase. Under the background of short-term sources of tighter supply and the inability of the downstream to effectively digest, such as the international market does not appear large fluctuations, it is expected that the short-term pure benzene market may be dominated by a narrow range of shocks.
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