By Lu Jundian, Liu Xiaojie, Jia Ting, Sun Mengyao, Liu Jiaming, Shenyang Research Institute of Chemical Industry

Production situation analysis and forecast

Pure benzene, as one of the most important petrochemical products, includes petroleum benzene and hydrogenated benzene. In recent years, China's pure benzene production capacity has continuously expanded. The traditional reforming process and emerging refining and chemical integration process are complementary to each other and mutually facilitating, jointly promoting the continuous expansion of China's pure benzene capacity. The continuous and rapid expansion of production capacity became a bright spot in the development of the pure benzene market in recent years, and at the same time, the supply pattern has also been gradually changing. Most of the new units in the past three years were refining and chemical integration projects, and with the launch of large-scale units such as Zhejiang Petrochemical Co., Ltd., the proportion of supply in East China still ranked first, and was 8% higher than that in 2021. From 2018 to 2022, the capacity, output and start-up load of China's pure benzene market showed a steady increase. In 2022, the domestic pure benzene production capacity was 29.365 million t/a, and the output was 19.228 million tons.

From 2018 to 2022, China's petroleum benzene production capacity had a development trend of continuous increasing, with a compound growth rate of 11.33% in the past five years, which was still in a period of rapid development. In 2022, the production capacity of petroleum benzene continued on the rise, with a newly-added capacity of 2.7 million t/a, and the total production capacity reached 21.015 million t/a, a year-on-year increase of 14.74%. From the perspective of production capacity growth rate, in 2020, refining and chemical integration units were put into operation one after another, which promoted the faster growth of the total production capacity, and the higher growth rate of production capacity; In 2021, some units were postponed, resulting in a slight year-on-year decline in the production capacity growth rate; In 2022, affected by the commissioning of Shenghong Refining & Chemical (Lianyungang) Co., Ltd., the growth rate rose again. The growth rate of China's petroleum benzene from 2018 to 2022 is shown in Figure 1.

Figure 1 The change of China’s petroleum benzene growth rate from 2018 to 2022

For a long time, the domestic petroleum benzene has had problems of too many production enterprises and units but small production capacity. With the commissioning of refining and chemical integration projects and the withdrawal of units with small production capacity in recent years, the production capacity of domestic petroleum benzene showed a development trend of large-scale and intensification. Due to the newly-added production capacity, Zhejiang Petrochemical Co., Ltd. currently has a total petroleum benzene production capacity of 2.77 million t/a, ranking first in China and accounting for 13.18% of China’s total capacity. The supply pattern of petroleum benzene has been also gradually changing, and East China still occupies the first place, with production capacity increasing from 29% in 2021 to 37% in 2022 of the total. See Table 1 for China’s main petroleum benzene manufacturers in 2022, and Figure 2 for the regional proportion of China's petroleum benzene production capacity in 2021/2022.

Figure 2 Regional proportion of China's petroleum benzene production capacity        in 2021/2022

From 2019 to 2022, with the continuous commissioning of aromatics complexes such as Hengli Petrochemical Co., Ltd. and Zhejiang Petrochemical Co., Ltd. Phase I and Phase II, China's petroleum benzene entered a peak period of capacity expansion. It is estimated that by 2023, the production capacity of petroleum benzene will increase by 2.06 million t/a, a year-on-year increase of 9.8%. By the end of 2023, China's petroleum benzene production capacity will reach 22.325 million t/a. By the end of 2026, the production capacity is expected to reach 25.875 million t/a. The new units of China’s petroleum benzene from 2023 to 2026 are shown in Table 2.

The production capacity of China’s hydrogenated benzene had limited expansion from 2018 to 2022, with an average annual compound growth rate of 0.92%. In 2022, the new capacity of hydrogenated benzene was 150 000 t/a, the production capacity hit 8.35 million t/a and the output reached 3.640 million tons. Judging from the capacity changes in recent years, the new production capacity expansion was slow due to the tight supply of raw material crude benzene most of the time and the high pressure in procurement of the benzene hydrogenation industry. It is expected that by 2024 China will have 900 000 t/a new hydrogenated benzene capacity. See Table 3 in detail for China's newly added hydrogenated benzene production capacity from 2023 to 2024.

Market analysis and forecast

China's pure benzene market was in short supply from 2018 to 2022. Although the output ramped up year by year, there was still a certain import demand. In 2022, China's pure benzene output was 19.228 million tons; In terms of demand, the upstream and downstream consumption of pure benzene in China maintained a simultaneous expansion and steady growth trend, with an average growth rate of 10.03%. In 2022, the apparent consumption of pure benzene in China was 22.543 million tons, with a year-on-year growth rate of 7.0%. In terms of imports, it hit the lowest in 2020 over the past five years and increased year by year from 2021 to 2022. The annual import in 2022 was 3.322 million tons, which was the highest over the past five years. The supply and demand balance of the domestic pure benzene market from 2018 to 2022 is shown in Table 4.

From 2018 to 2022, the downstream consumption of pure benzene in China maintained a steady growth trend, and the upstream and downstream expanded simultaneously. The downstream consumption of pure benzene in China was mainly concentrated in styrene, caprolactam, phenol, aniline and adipic acid, among which styrene is the largest consumption field in China. The downstream consumption structure of pure benzene in China from 2018 to 2022 is shown in Figure 3. The past 5 years were a period of capacity expansion for the domestic styrene industry. The substantial expansion of production capacity drove the proportion of styrene in pure benzene consumption from 43% in 2018 to 48% in 2022, ranking first in the downstream of pure benzene; the proportion of caprolactam remained unchanged and the proportion of phenol increased from 13% to 14%.

Figure 3 The downstream consumption structure of pure benzene in China from        2018 to 2022

From the perspective of changes of pure benzene consumption regions, East China always ranked first and was the main consumption area from 2018 to 2022. In the next few years, there will be more downstream units to be put into operation in these major regions. East China, with large volume base, will still be the largest consumption area. See Figure 4 for details of the regional proportion of pure benzene consumption in China from 2019 to 2022.

    Figure 4 Regional proportion of pure benzene consumption in China from 2019 to 2022

In 2023, the downstream production capacity of pure benzene in China has relatively rapid growth. Among the downstream, styrene still the one with the fastest growth, and the newly-added production capacity is equivalent to7.7533 million tons of new pure benzene consumption. See Table 5 for details.

Import and export analysis and forecast

From 2018 to 2022, the import volume of pure benzene in China maintained a steady growth trend, while the export volume lingered at a low level. The detailed import and export volume of pure benzene in China from 2018 to 2022 are shown in Figure 5 and Figure 6, respectively.

Figure 5 The import volume of China's pure benzene from 2018 to 2022

Figure 6 The export volume of China's pure benzene from 2018 to 2022

In 2022, China imported 3.3218 million tons of pure benzene, reaching a record high, and the import dependence increased slightly by 0.64 percentage points. China's position as the largest demand country became more stable. From the perspective of trading partners, South Korea, Brunei, and Thailand were still the most important import trading partners, the three accounting for 73.49% of the total import volume, a decrease of 0.55 percentage points from the previous year. See Figure 7 for details of China's pure benzene import trading partners from 2021 to 2022.

Figure 7 China's pure benzene import trading partners from 2021 to 2022

From the perspective of trade methods, the proportion of imports in general trade method in 2022 increased by 3 percentage points compared with 2021, and the proportion in processing trade of imported material method decreased by 2 percentage points. See Figure 8 for the import trade mode of China's pure benzene from 2021 to 2022.

Figure 8 The import trade mode of China's pure benzene from 2021 to 2022

In the next few years, the downstream of China's pure benzene will continue to expand, and the imported pure benzene will still serve as an important supplement. On the one hand, it is difficult to increase the output of pure benzene from the start-up load; On the other hand, most of the new entrants are supporting units of the downstream, and the growth rate of downstream production capacity is significantly higher than that of pure benzene, so the condition in short supply will be hard to change in short term. Therefore, the overall import volume may remain high in 2023.