Lead: As the impact of geopolitical conflicts in the Middle East on the domestic chemical market continues to weaken, the domestic pure benzene and hydrogenated benzene markets have recently returned to their own fundamentals: East China pure benzene port inventories are steadily declining, but downstream demand is insufficient, hindering price transmission downstream. Meanwhile, profits for hydrogenated benzene are shrinking rapidly.

As of now, the theoretical profit for hydrogenated benzene has narrowed sharply from a previous high of around 700 yuan/ton to 156 yuan/ton. This change is not a short-term fluctuation but the beginning of a gradual manifestation of structural contradictions in the industrial chain. Let us briefly analyze the driving logic behind the profit contraction for hydrogenated benzene.

I. Declining Demand for Pure Benzene

| Table: Weekly Profit Comparison of Pure Benzene Downstream Products (2026) |
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| (Figure placeholder) |
| Source: chempricehub Information |

Currently, most downstream products of pure benzene are experiencing profit losses, with some units reducing or suspending production, leading to decreased demand for pure benzene and hydrogenated benzene. Major downstream products such as styrene, caprolactam, and phenol have seen their own profit margins compressed, significantly reducing their acceptance of high-priced pure benzene and hydrogenated benzene. The price transmission channel for pure benzene downstream has become blocked, preventing upstream raw material prices from being successfully passed on to downstream and end users. As a result, prices for pure benzene and hydrogenated benzene have begun to decline slowly.

At the same time, the cost side for hydrogenated benzene itself—crude benzene—exhibits strong price rigidity due to extremely low social inventories. This leads to a narrowing of the price spread between crude benzene and hydrogenated benzene, making it difficult to sustain profits for hydrogenated benzene.

II. Multiple Hydrogenated Benzene Units Restarting Soon in Late May, Anticipated Increase in Operating Rates

| Table: Maintenance Schedule for Domestic Hydrogenated Benzene Units in May-June (10,000 tons/year) |
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| Region | Company Name | Capacity | Maintenance Period |
| North China | Qian'an Jiujiang | 10 | Shutdown on May 8 for half a month |
| East China | Shandong Laigang | 10 | Shutdown on May 8 for 20 days |
| East China | Shandong Huineng | 25 | Two units on rotational maintenance for 20 days starting May 13 |
| Central China | Puyang Shengyuan | 15 | Shutdown for maintenance on May 7, restart feeding on May 14. |
| Central China | Henan Yutian | 8 | One unit shut down for maintenance on May 11, lasting one week. |
| North China | Hebei Rongte | 10 | Load increased on the evening of May 11, now back to normal. |
| North China | Hebei Ruixin Jinhua | 10 | Restarted on May 9, currently heating up the boiler. |
| North China | Hebei Minhai | 10 | Planned restart in early June |
| East China | Shandong Yuhuang | 15 | Possible start-up in June |

Source: chempricehub Information

In the coming weeks, previously idle hydrogenated benzene units undergoing maintenance will gradually restart. Additionally, two units that have been idle for a long time are scheduled to restart in June. This means the operating rate of the hydrogenated benzene industry is expected to rise significantly from current levels, potentially reaching around 75% in June, leading to an increase in hydrogenated benzene supply. Without a notable increase in the supply of crude benzene feedstock, the higher operating rate for hydrogenated benzene will undoubtedly increase cost pressures on enterprises, further squeezing the industry's profits.

III. Insufficient Supply Elasticity of Crude Benzene

Although coke oven plants still have margins from coke production and overall operating rates have increased, crude benzene, as a byproduct of coking, has a yield of only about 1% of total coking products. This very small proportion means that even if coke oven plant loads continue to rise, the absolute increase in crude benzene output remains limited.

| Figure: Trend of Domestic Coking Enterprise Capacity Utilization Rate (2025-2026) |
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| (Figure placeholder) |
| Source: chempricehub Information |

Furthermore, current social inventories of crude benzene are already at low levels. This means that when hydrogenated benzene operating rates increase and procurement demand for crude benzene feedstock is concentrated, the crude benzene market will face a supply shortage. Crude benzene prices will not only find it difficult to follow the weakness of hydrogenated benzene but may even remain firm or rise due to demand pull.

This creates a situation where the selling price of hydrogenated benzene is suppressed by downstream forces and cannot rise, while the raw material crude benzene price remains rigid due to low inventories and increased demand. The profit margin for hydrogenated benzene will be squeezed from both sides.

IV. Likely Continued Decline in Hydrogenated Benzene Profits Going Forward

Based on the above logic, we judge that hydrogenated benzene profits will likely continue to narrow and gradually approach the breakeven point. Some high-cost units or those with financial pressure may slip into losses. Conditions for a significant profit recovery are not yet in place. Only when profits deteriorate enough to force the industry to reduce loads or shut down again, leading to a rebalancing of supply and demand, can profits potentially recover. Attention should be paid to changes in the crude benzene-hydrogenated benzene price spread, as well as profit and unit changes in various downstream products.