Spot market benzene prices in the North American market averaged $1.96/gallon in mid-April, a 72¢ increase from the March average—due mostly to a surge in demand in Asia, where the chemical had jumped to $2.05, and expanded production of styrene for export sales.

ICISpricing.com suggests that healthy styrene demand in Asian markets has tightened supply of benzene. In fact, Asian demand for styrene has improved so much in the first quarter that benzene from the U.S. and Europe soon may be exported to Asian styrene producers. There also could be surge in U.S. styrene exports, which fell by 6% during the first two months of 2009 to 207,803 metric tons from 221,329 metric tons in the same period of 2008.

Some analysts suggest that higher spot pricing for benzene in April has reinforced supplier sentiment that the aromatic feedstock chemical soon will be priced above $2/gal. Their view is that the surge in exports will tighten domestic supply and create a closer balance with demand. Also, expanded production at traditional styrene manufacturing units to support export sales has increased benzene use in the U.S. Gulf of Mexico and exacerbated the supply tightness.

An ICISpricing.com report says "recent weeks of strong styrene activity, particularly in U.S. Gulf exports, have brought previously long benzene supply into closer balance with underlying demand." The market activity boosted styrene's spot price by a nickel in mid-April to 42¢/lb. However, some market participants questioned long the expanded demand for styrene exports will persist in the beleaguered global polystyrene sector.

Also, other analysts say the return of benzene prices above those for toluene—a scenario that has not been seen since last October—could prompt restarts of idled styrene units using toluene as the feedstock, driving inventories up and benzene prices back down. Toluene supply is high and prices remain around the $1.65/gal in March.