Benzene – Procurement Best Practices & Sourcing Strategies

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Benzene Market Global Size:

Increasing phenol usage and demand for methylene diphenyl diisocyanate are the key factors driving the evolution of the benzene market during the forecast period of 2023 to 2026. Also, the growing need for polyester in industries like packaging, automobiles, and clothing is a major factor in the market’s expansion. ELINT Market Research conducted an in-depth examination of the global benzene market and revealed a capacity of 67.9 MMT and a demand of 53.53 MMT in 2023. Further, this procurement intelligence study says that demand metrics are projected to rise at a CAGR of 2.5 percent by 2026.

Further, benzene is a common feedstock for several compounds used in diverse sectors in the form of intermediate chemicals to manufacture nylons, polymers, resin, and synthetic textiles. Also, worldwide regions have seen an adverse effect on demand for benzene and its substitutes because of the substantial and unparalleled impact of COVID-19. Moreover, based on a geographical review of the worldwide benzene market, Asia Pacific emerged as the leading region that holds the largest market share due to the existence of numerous industries like rubber, plastics, glues, paints, pharmaceuticals, and petrochemicals, which use benzene and its derivatives. Also, primary APAC provinces that are in developing stages including China and India are predicted to prosper due to various benzene applications in these regions to meet growing consumer demand.

Additionally, the last ten years have seen a significant expansion in the global offshore petroleum business due to technological developments, especially in the utilization of hydraulic drilling to produce shale oil. As oil and gas production in multiple regions has exceeded local fuel demand, investors’ attention has been directed more toward the development of innovative petrochemical facilities. Thus, both the huge amount of crude oil and the growing petrochemical sector’s needs are anticipated to support benzene market expansion.

Market Definition:

Benzene is a volatile fragrant hydrocarbon that is transparent, extremely explosive, and used as a major petrochemical industrial lubricant. This petrochemical contains several subsidiaries including aniline, methyl benzene, cumene, cyclohexane, chlorine, ethanol, nitrobenzene, and phenol, which tend to vanish quickly when exposed to the atmosphere. In addition, benzene has applications in consumer products, electrical and electronic devices, transportation, construction, and pharmaceutical sectors. These industries employ benzene in the form of a solvent in an extensive spectrum of industrial and economic fields.

Benzene Market Drivers:

1. Demands from Automobile and Construction Industries –

Benzene has key derivatives like phenol and styrene which are mainly employed in the automobile and construction sectors which drives growth in the global benzene market. Phenol is used as a primary raw material to manufacture polycarbonates and epoxy resins, assisting in developing automotive components, electronic gadgets, and construction materials. On the flip side, styrene helps manufacture polystyrene and other different copolymers and assists in generating insulation materials, packaging, and pieces for the automotive sector.

2. Rise in E-Commerce Industry –

One of the most rapidly extending e-commerce sectors in the world resides in India. As per the analysis, by 2030, online shopping in India is anticipated to constitute 37% of the entire established retail economy. However, worldwide retail segments are also developing. The reason behind this proliferation is an increase in smartphone and internet usage and the implementation of new marketing strategies. Thus, more consumers are striving to shop online which will fuel the e-commerce sector. Hence, this factor automatically drives the global benzene procurement intelligence market forward due to packaging requirements.

Benzene Market Challenges:

1. Lighter Cracking Methods in the US and EU –

The US and the EU regions executed lighter cracking processes to reduce the yield of aromatics, including benzene. Lighter cracking, or the trend away from heavier feedstocks like naphtha and toward more delicate ones like ethane, is mainly motivated by the abundance of shale gas and the demand for more economical and efficient petrochemical manufacturing. Because of this change, less benzene and other aromatic goods are produced, which restricts the amount available on the market. Hence, decreased benzene availability may cause supply chains to become more constrained and raise overall expenses.

2. Harmful Exposure of Benzene –

Worldwide medical industries have classified benzene as carcinogenic to humans. Benzene exposure for even a short period can cause narcosis, eye irritation, and skin irritation. While exposure for a longer period can drive significant health issues. Hence, governments issued crucial standards concerning people’s safety and limited the beneze’s disclosure time.

Benzene Market Opportunities:

1. Increasing Export Opportunity for Asia –

Asia’s massive manufacturing abilities and affordable techniques have made it a key center for petrochemical creation, especially in nations like China, South Korea, and India. The demand gap in Western markets presents Asian manufacturers with profitable export options as a result of this phenomenon.

2. Eco-Friendly Production Methods –

Companies are progressively highlighting environmentally sustainable benzene production techniques. This initiative can significantly reduce the process’ carbon footprint since less fuel may be used to accomplish the same transformation.

Benzene Market Segmentation:

1. Various Derivatives –

Fundamental derivatives of benzene that function in the market include Cumene, Cyclohexane, Alkyl Benzene, Ethyl Benzene, Nitro Benzene, and more.

2. End Use Applications –

Major end-user sectors of benzene include transportation, healthcare, pulp & paper, construction, automobile, packaging, and textile.

Supplier and Buyer Powers in Benzene Market:

Some of the prominent countries hold substantial supply shares in the global benzene procurement market including North America at 14%, the EU at 21%, Asia at 61%, and other regions at 4%. Further, North America and the EU show high supplier power and Asia presents medium supplier power. Moreover, when it comes to buyer powers North America and EU appeared at lower levels, while Asia appeared at medium degree. Additionally, the price outlook for the benzene market for Q1 2023 versus Q4 2022 states North America at a 20-25% cost increase, the EU at a 20-25% rise, and Asia at a 15–20% increase.

Engagement Models, Cost Component, and Contract Period in the Benzene Market:

US and EU countries employ around 70 percent of contract transactions in their engagement models. On the other hand, Asia uses spot buying contracts and holds almost 50 percent stakes. Furthermore, the key contract period for the benzene industry can last for two years along with quarterly price revisions. Moreover, raw materials occurred as impactful and primary cost components in the market. Main provinces like North America hold 57%, the EU owns 48%, and Asia owns 50% stakes for raw materials.

Key Suppliers in the Benzene Market:

Key suppliers of the benzene market include ExxonMobil​, Shell​, Flint Hills​, Dow​, Marathon Petroleum​, Sabic​, Braskem​, Pemex​, Petrobras​, Sinopec​, PTTAR​, CNPC​, Formosa Chemicals and Fibre​, and Shanghai Petrochemical​.