Introduction: Recently, the domestic hydrogenated benzene market has been on a weak downward trend overall. As of late June, the negotiated reference price for hydrogenated benzene in the Shandong region was around 6380-6400 RMB/ton. Since May, with the fading of geopolitical risk premiums and the decline in crude oil prices, the hydrogenated benzene market has ended its volatile fluctuations from the first half of the year and entered a downward channel. Currently, the market is characterized by a strong wait-and-see sentiment. Downstream players maintain purchasing on a need-to basis, and the trading atmosphere for new orders is lackluster.

1. The hydrogenated benzene industry is generally facing losses.

Weakened cost support is the direct reason for the recent decline in pure benzene prices. On one hand, as tensions between the US and Iran ease and geopolitical premiums gradually fade, international crude oil prices have fluctuated and weakened, dragging down the domestic chemical market. On the other hand, although crude benzene, the direct raw material for hydrogenated benzene, has shown relative resilience, its prices have also seen a high-level correction against the backdrop of the overall weakening pure benzene market. In June, the price spread between crude benzene and hydrogenated benzene tended to converge, significantly compressing the industry's profit margins. According to data from chempricehub, the theoretical profit for hydrogenated benzene enterprises in the Shandong region in June has dropped to between -30 and -190 RMB/ton, with the industry entering a state of widespread losses.

2. The operating rate and production of hydrogenated benzene continue to contract.

Faced with sustained loss pressure, the willingness of hydrogenated benzene enterprises to operate has declined significantly. Recently, the overall industry operating rate has continued its downward trend. As of the week ending June 25, the domestic benzene hydrogenation unit operating rate has dropped to 54.97%, down 4.55 percentage points from the previous week, with weekly production reducing to 72,900 metric tons. Units at Ningxia Tongde Aixin and Henan Pioneer have restarted, while one unit at Henan Yutian, Shandong Hengxin, Xuecheng Energy, and Panjin Ruide have all shut down. Production loads at Henan Jinyuan and Xinyang have decreased, leading to an increase in maintenance-related production losses. Entering June, the monthly domestic hydrogenated benzene production is approximately 343,400 tons, a month-on-month decrease of 14.79%. From the supply side, the industry is undergoing a round of market-driven passive capacity reduction.

3. Downstream off-season characteristics are evident, with demand support being limited.

Currently, it is the traditional off-season for demand, with both domestic end-user demand and export orders showing weakness. Although the operating loads for hydrogenated benzene's major downstream products—styrene, caprolactam, and phenol—show divergence, their overall raw material procurement remains at a just-needed pace, with little willingness to chase higher prices. Against the backdrop of profit pressure and weak orders, downstream companies are generally adopting low inventory strategies, making it difficult to effectively boost hydrogenated benzene prices. In June, the domestic demand for hydrogenated benzene was approximately 2.52 million tons, down 5.62% month-on-month.

Conclusion: In summary, the current hydrogenated benzene market is in a weak equilibrium pattern of "declining both supply and demand." On the cost side, crude oil trends are still dominated by geopolitical situations and macro sentiment. If negotiations proceed smoothly, there is potential for further oil price weakness, which would consequently loosen hydrogenated benzene prices. On the fundamentals, the supply contraction caused by industry losses has been partially realized, but on the demand side, there is a lack of improvement expectations during the off-season. Although supply reductions provide some floor support for the market, under the dual pressure of weak costs and sluggish demand, the hydrogenated benzene market is likely to continue its weak fluctuation trend in the short term. Future attention should be focused on the guidance of geopolitical changes on crude oil prices, as well as the subsequent recovery status of hydrogenated benzene unit operations.