【Introduction】: This week, pure benzene prices surged and then pulled back. The market traded on the support from reduced supply against negative feedback from downstream sectors, resulting in wide price fluctuations.
This week, spot prices in East China oscillated at high levels, with a trading range of 10,300–10,850 yuan/ton. The correlation between pure benzene and crude oil weakened this week. Post-holiday inventories in East China remained low, and most cargo had already been allocated to specific buyers, leaving limited tradable spot resources. Consequently, the center of gravity for pure benzene negotiations jumped significantly. Refineries executed a "protect fuels, reduce chemicals" strategy by proactively lowering aromatic yields. Additionally, some refineries implemented defensive load reductions due to concerns over future feedstock shortages. As a result, overall pure benzene operating rates fell short of expectations, with insufficient upward elasticity in production loads. Import volumes increased only marginally. Hydrogenated benzene producers maintained low operating rates due to constraints on raw material availability and profit margins. While the average operating rate of major downstream sectors rose slightly month-on-month, their production profits were squeezed by high pure benzene prices. Negative feedback began to emerge toward the end of the week, leading to a decline in market prices.
Following the brief reopening of the Strait of Hormuz in June, the market held relatively optimistic expectations regarding subsequent crude oil transit volumes and the recovery of pure benzene production. Based on the progress of unit restarts during July and August, domestic pure benzene capacity utilization was projected to rebound to the pre-war level of 79% (seen in February) by early October.
However, as tensions in the Middle East escalated during August and September, the market increasingly believed that the strait issue would not be resolved in the short term. Facing excessively high crude oil acquisition costs for October and November, some domestic refineries cut production. Currently, the recovery in October’s pure benzene output and capacity utilization has lagged significantly behind August’s forecasts. Domestic capacity utilization has only rebounded to 72%, falling below the 79% expected in August. Driven by this underperformance on the supply side, the market primarily focused on trading the shortfall in supply recovery and the possibility of further load reductions in November. Consequently, prices continued to surge around the National Day holiday.
After the weighted downstream capacity utilization dropped to its lowest level since April 2025 in late August, it recorded three consecutive weeks of recovery. By early October, weighted capacity utilization rebounded to 69%, which was 4 percentage points lower than the same period in 2025 and 5 percentage points lower than the pre-war level in late February. Downstream products such as styrene, caprolactam, phenol, and aniline all saw five consecutive weeks of rising capacity utilization, driving the weighted average higher. Although this recovery in downstream operating rates was primarily driven by the scheduled return of units after maintenance—rather than being closely linked to improved downstream profits—the reality of persistently low inventories across the entire chain (pure benzene-downstream-terminal) still fueled expectations for demand recovery. Therefore, even though pure benzene prices rose rapidly and exceeded the cost tolerance of some downstream users, the market remained focused on the bullish support provided by reduced supply, as negative feedback from downstream operations had not yet fully manifested.
This week, as pure benzene prices continued to climb, negative feedback from downstream losses emerged clearly, with signals indicating a collective drop in the capacity utilization of the five major downstream sectors. This caused the weighted average to turn downward, weakening to 67%, with potential for further declines. Meanwhile, the previously heavily traded signal of refinery production cuts proved less significant, as some companies subject to repeated speculation did not implement notable reductions. At this point, the reduction in downstream demand outweighed the potential supply contraction, becoming a more prominent trading signal and triggering a decline in pure benzene prices.
Currently, although supply reductions have fallen short of expectations, it is an objective fact that operating rates have failed to recover to the levels predicted in August. Similarly, import volumes are expected to remain around 300,000 tons in October due to concentrated maintenance shutdowns at South Korean refineries, keeping East China port inventories persistently low. Domestic refineries continue to face high crude oil arrival costs, and Shandong local refineries have seen declining atmospheric and vacuum distillation unit loads for three consecutive weeks. Therefore, despite the emergence of negative feedback from downstream sectors, the tight supply situation for pure benzene has not been reversed. The supply-demand balance sheet for October and November continues to show inventory depletion. With crude oil prices remaining at high levels, pure benzene market prices are expected to continue oscillating at high levels, likely within the range of 9,000–10,000 yuan/ton in the short term.
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