Benzene Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

 The Global Benzene Market size was estimated at over 50 million tons in 2020 and the market is projected to register a CAGR of over 3% during the forecast period (2021-2026). The market was negatively impacted by COVID-19 in 2020. Automotive manufacturing units were on a temporary halt owing to the pandemic scenario, which minimized the demand of products like nylon tires, injection-molded vehicle parts, foam seatings, and paints, which are made from benzene-derived intermediates like nylon, styrene, and phenol resins, thus creating a negative impact on the market demand. However, demand for the drugs like paracetamol, which consumes benzene-derived intermediates such as chlorobenzene, has increased in the current situation, thus stimulating the market demand in the pharmaceutical sector. Furthermore, the usage of packaging made up of polystyrene, an intermediate derived from benzene, has increased in food and e-commerce applications, which in-turn has stimulated the market demand for benzene.

- Over the short term, increasing demand for styrene polymers from various end-user industries such as textile, packaging, building and construction, etc. is expected to drive the market’s growth. In developed countries, the construction sector is mature compared to the one in developing economies, and it is growing drastically, fueled by the growing population and increasing urbanization in these countries. By 2021, China and India, together, are projected to account for around 40% of the global construction industry.

- Detrimental effects of benzene exposure is likely to hinder the growth of the market studied.

- Downstream expansion or upcoming plants in the petrochemical business is likely to create opportunities for the market in the coming years.

- Asia-Pacific region is expected to dominate the market and is also likely to witness the highest CAGR during the forecast period.

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Key Market Trends

Increasing Demand for Ethylbenzene

- Ethylbenzene is a highly-inflammable colorless liquid with an aromatic odor. It is majorly used in the manufacturing of styrene.

- Styrene is used in the production of various products, such as polystyrene, acrylonitrile-

butadiene-styrene (ABS), styrene-acrylonitrile (SAN) resins, styrene-butadiene elastomers, latexes, and unsaturated polyester resins.

- Styrene Polymers are used in various products such as televisions, IT equipment, disposable medical products, like test kits, consumer electronics, portable speakers, cassette tape housing, etc.

- Ethylbenzene and its derivative like styrene are used to produce automotive products and material such as rubber tires and plastic auto parts. As of Q3 2019, about 67.47 million vehicles were produced globally, whereas only 52 million vehicles were produce till Q3 2020 compared to previous year, registering a decline rate of about 23%, thus witnessing a decrease in demand for ethylbenzene and styrene, which in-turn has negatively impacted the market growth of benzene.

- The demand for styrene is continuously growing in the Middle-East and Asia-Pacific, owing to increased demand for rubber tires in both regions.

- China is projected to produce 704 million tires per year by 2025, including 527 million passenger radial tires, 148 million truck/bus radial tires, 29 million bias truck tires, 20,000 extra-large industrial tires, 12 million agricultural tires and 54,000 aircraft tires. In addition, China will produce 120.7 million motorcycle tires and 420 million bicycle tires annually by 2025.

- Pyramids Tires, started its first tire roll production line in May 2020 in Egypt. However, the factory currently manufactures motorcycle, forklift and agricultural tires as part of the first phase of the plant’s development. The second phase, which is scheduled to be completed by the end of 2022, is expected to add passenger car, truck and off-the-road (OTR) tires to the company portfolio.

- Apart from styrene, ethylbenzene is also used as a solvent in fuels and as an intermediate for other chemical applications. These applications are likely to support the demand for and growth of ethylbenzene.

- The increasing number of applications of styrene, such as in general-purpose polystyrene, EPS, and ABS, have also contributed to the positive trend that is expected to continue.

- Therefore, the aforementioned factors are expected to show significant impact on the market in the coming years.

Asia-Pacific Region to Dominate the Market

- Asia-pacific presently leads the consumption of benzene with around 50% share of global consumption.

- This region is also expected to be the fastest-growing market during the forecasted period, with increasing markets for end-users like electronics and home appliances, packaging, and construction in China, India, and ASEAN countries.

- Benzene is widely used in the production of construction industry products like adhesives, paints, flooring, fiberglass, and others. In 2019, the Chinese construction industry was valued at about USD 1092.9 billion and is estimated to reach about USD 1117.42 billion by 2021, with a CAGR of about 1%, which in-turn stimulates the demand for the benzene market.

- Benzene is used to prepare intermediates like nylon, styrene, and phenol resins, which are further processed to produce products of the automotive industry such as nylon tires, seating foam, and others. Up to Q3 of 2019, China has produced 18.17 million vehicles and has reached 16.96 million vehicles up to Q3 of 2020, registering a decline rate of about 6.66%, which in turn negatively affects the market growth for benzene.

- The growth of these end-user industries, especially in emerging markets, like China, India is propelling the growth of styrene, which in turn is responsible for growth in the usage of benzene, as it is one of the key raw materials for styrene production.

- Furthermore, declining automotive industry along with temporary closure of automotive and construction activities, owing to the pandemic scenario, had led to a decrease in the demand for the materials made up of benzene and its derivative.

- However, considering the post-pandemic scenario, end-user industries, such as construction, are picking up the pace in this region and is estimated to drive the regional market's demand for benzene.

Competitive Landscape

The benzene market is consolidated in nature. Some of the major players in the market include BASF SE, Chevron Phillips Chemical Company LLC, Exxon Mobil Corporation, Royal Dutch Shell Plc, and LG Chem, among others.

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