A Slight Price Drop of Pure Benzene
                         By Wang Zhendong
1. Domestic production
Pure benzene in China mainly  comes  from  platinum  reforming  of  oil
refining and coking of coal. It was chiefly extracted  from  coal  tar
before the 70's, but the output was small. Since the advent of  reform
and opening up, the petrochemical industry has developed fast and  the
output of petroleum benzene has increased  by  a  big  margin  through
introducing advanced foreign technologies and equipment.  China  today
has more than 60 pure benzene producers with a total capacity of 1.4 -
1.5 million t/a. There are 15 producers with a capacity of over 10 000
t/a including Yangzi Petrochemical  Corporation,   Qilu  Petrochemical
Corporation and Jilin Chemical Industrial Corporation. Table  1  shows
the output of pure benzene in China in the recent years.
2. Domestic demand
The consumption of pure ben- zene  in  China  is  roughly  75%  in  the
chemical industry  ( 20%  for  phenol,   12%  for  styrene,   11%  for
chlorobenzene, 7% for nitrobenzene, 6% for alkylbenzene  and  19%  for
others) and 25% in the pharmaceutical industry, the light industry and
rubber products.
In the recent two years, the chemical market is soft with  slack  sales
and falling prices in most products. Major pure benzene consumers such
as phenol, aniline, cyclohexanone, nitrobenzene and chlorobenzene  are
in short demand and at low price level. The slack market of dyestuffs,
pesticides, coatings and rubber products can hardly be improved either
. There is a considerable shortage of styrene, but the import amount is
big. The domestic resources of styrene are therefore excessive and the
price is going  down.   Judging  from  the  production  and  marketing
situation of pure benzene and downstream products, the demand of  pure
benzene will be around 1.2 million  tons  in  1998,   but  the  output
planned for the year is 1.3 million tons. Pure benzene will surely  be
in short demand in 1998.
3. Import and export analysis
In spite of a rapid development made in pure benzene production  before
1990, the output could not meet the demand and a  considerable  amount
was imported each year. Since  the  90's,   however,   the  output  of
petroleum benzene has made a big margin increase, the  supply  tension
is eased and some domestic resources are exported. Table 2  shows  the
import and export of pure benzene in China in the recent years.
As is seen from the above data, the import amount rose sharply and  the
export amount dropped by a big margin in 1995.  Pure  benzene  was  in
short demand and the price went down that year. The import amount  was
reduced by a big margin and the export amount rose  sharply  in  1996.
The resources of pure benzene were in short supply and the price  went
up that year. It shows that the import and export of pure benzene  has
a considerable impact on the domestic market.
There has also been import of some downstream products in  China.   The
import amount in 1997 was 440 000 tons for styrene, 11  000  tons  for
alkylbenzene, 61 900 tons for phenol and 15 900 tons for cyclohexanone
. The import of downstream products means the increase  in  the  import
amount of pure benzene.
The fluctuations in the domestic and international  markets  this  year
have made import of pure benzene more profitable. The import amount is
expected to be higher  this  year.   Due  to  the  low  price  in  the
international market, pure benzene export  is  not  as  profitable  as
domestic sales. The export amount is therefore expected to be  reduced
this year and there is no room for optimism in market prospects
4. Market trend this year
The market of pure benzene dropped with the down-slide of the  chemical
market from the second half of 1995. The product was in  short  demand
and the price went down to 600 - 800 yuan per ton. The chemical market
was still slack in 1997, but both supply and demand  of  pure  benzene
were brisk and the price rose  to  3  400  yuan  per  ton.   The  good
situation did not last long however, and  the  price  quickly  dropped
once again to 2 700 - 2 300 yuan per ton at  the  end  of  1997.   The
demand of pure benzene will be higher  in  1998  and  the  supply  and
demand will be basically balanced. Affected by the international market,
there will be a slight price drop in the year.
Table 1   Output of Pure Benzene in China in the Recent Years      ('000 t)
  Year    Output    Growth rate over        Year      Output      Growth rate over
                    the same period                                the same period
                     last year (%)                                  last year (%)
  1991      745         13.57               1995          958.0        11.53
  1992      819          9.93               1996        1 017.8       &