Geopolitical conflicts drive up crude oil prices, maintaining the strong upward trend of C9 pyrolysis gasoline.

Introduction: The low-intensity conflict between the US and Iran continues, with Houthi attacks on Saudi oil facilities elevating the crude supply risk premium. Brent crude prices surged significantly on a weekly basis, providing strong cost support for pyrolysis C9. Domestically, operating rates of multiple cracking units fluctuated, leading to a slight decrease in market supply. Downstream profitability continued to diverge: gross margins for industrial aromatic solvents recovered substantially, while losses for C9 thermal polymerization petroleum resins narrowed. However, downstream resin users remained resistant to high raw material prices, limiting purchases to essential small-volume orders. With positive factors from costs and supply offset by uneven downstream demand, pyrolysis C9 prices continued to rise, maintaining a firm short-term market trend.

Domestic Spot Market: Nationwide Price Increases, Stable Regional Spreads

Table 1: China Pyrolysis C9 Regional Price Comparison (Unit: RMB/ton)

Data Source: Chempricehub Information

During this period, domestic pyrolysis C9 quotes rose across all regions. The national average price reached 5,611 RMB/ton, an increase of 293 RMB/ton (+5.51%) compared to the previous period. By region, South China maintained the highest average price at 5,713 RMB/ton, while Northeast, North China, East China, and Central China saw synchronized increases of 150 RMB/ton. The price spread between North China and East China remained stable at 38 RMB/ton. Some sample enterprises in East China halted operations for maintenance, preventing cross-regional arbitrage opportunities and limiting inter-regional cargo flow.

Core Drivers: Multi-Factor Dynamics, Cost and Supply Provide Support, Downstream Divergence Acts as Constraint

Table 2: China Pyrolysis C9 Industry Chain Price Comparison (Unit: RMB/ton)

Data Source: Chempricehub Information

1. Cost Side: Middle East Geopolitical Conflict Intensifies, Crude Oil Surge Solidifies Cost Support

The low-intensity conflict between the US and Iran showed no signs of easing. Houthi forces attacked Saudi oil facilities, and Iranian officials issued statements regarding potential tanker strikes, raising market concerns about further conflict escalation and lifting the crude supply risk premium. The weekly average price of Brent crude stood at $97.59/barrel, up $5.63/barrel (+6.12%) week-on-week. Geopolitical factors drove international oil prices higher, solidifying the cost floor for pyrolysis C9 and giving independent refiners confidence to raise quotes. Although bearish factors such as potential US-Iran peace talks, Fed rate hike expectations, and weak global demand pressured oil prices, short-term geopolitical risks remained dominant, providing strong cost support for pyrolysis C9.

2. Supply Side: Fluctuating Unit Operating Rates Lead to Slight Supply Contraction, Creating Positive Momentum

No new unit shutdowns for maintenance were reported during the week. However, operating rates of several domestic cracking units fluctuated. Shell Phase II remained under temporary maintenance, while Jincheng Petrochemical, Yanshan Petrochemical, Yangzi Petrochemical, and Hainan Refining & Chemical continued long-cycle major overhauls. Pyrolysis C9 production totaled 59,800 tons, a decrease of 400 tons from the previous period. Capacity utilization fell by 0.57 percentage points to 75.25%. Liaoning Yufu’s C9 resin unit is scheduled to resume shipments on September 5, but Daqing Huake, Fuhua Lihua, and Fushun Kelong resin units remain under maintenance. Looking ahead, production is expected to recover to 61,000 tons, indicating potential supply-side increments in the next period.

3. Demand Side: Divergent Downstream Profitability; Essential Purchases Prevail Amid Rising Resistance to High Prices

Performance varied significantly between the two main downstream sectors. The capacity utilization rate for industrial aromatic solvents held steady at 54.45%. Gasoline bunker sales provided consumption support, driving downstream customers to enter the market for restocking. Auction premiums continued, resulting in decent trading activity. Gross margins for this segment recovered sharply from 4 RMB/ton to 125 RMB/ton. Regarding C9 thermal polymerization petroleum resin, the resumption of shipments by Liaoning Yufu lifted the overall capacity utilization rate from 47.39% to 51.69%. Theoretical processing profit stood at -45 RMB/ton, narrowing losses from -83 RMB/ton in the previous period. However, downstream resin users showed increasing resistance to high raw material prices, restricting purchases to essential small volumes and showing little willingness for large-scale stockpiling. This sentiment somewhat constrained the upside potential for pyrolysis C9 prices.

Industry Chain Transmission: Costs Pass Through Top-Down, Downstream Profit Divergence Limits Market Elasticity

Driven by Middle East geopolitical conflicts, the benefits of rising crude oil prices transmitted top-down to pyrolysis C9, pushing domestic market quotes consistently higher. However, downstream profitability trends diverged markedly: industrial aromatic solvents strengthened alongside the gasoline market, achieving substantial margin recovery due to improved trading conditions. Conversely, C9 thermal polymerization petroleum resin struggled to fully pass on raw material cost increases, remaining in a loss position. Downstream buyers adopted a wait-and-see approach, blocking cost transmission. While pyrolysis C9 prices rose due to dual positives from geopolitically driven cost support and slight supply contraction, weak demand from the C9 petroleum resin sector acted as a drag. The market evolved into a tug-of-war scenario where costs and supply provide a floor, while partial downstream demand acts as a ceiling.

Summary and Outlook

In summary, Middle East geopolitical disturbances boosting crude oil prices and fluctuating domestic unit operating rates tightening supply constitute the core bullish factors for pyrolysis C9. On the other hand, downstream resistance to high raw material prices and limited demand release from the C9 petroleum resin sector form bearish pressures. With bull and bear factors hedging each other, pyrolysis C9 prices continued to rise, maintaining a firm short-term trend.

Looking ahead to next week, international crude oil futures are expected to trend upward, providing cost-side support. Pyrolysis C9 market supply is projected to increase slightly, creating some bearish pressure. On the demand side, industrial aromatic solvents are expected to perform strongly in line with the gasoline market, with gross margins likely to continue rising. The loss-making situation for C9 thermal polymerization petroleum resin is unlikely to improve rapidly; although operating rates may see a slight uptick, downstream caution regarding large-scale stockpiling persists.

The mainstream trading range for pyrolysis C9 is forecasted to be 5,700–6,000 RMB/ton. Key focus areas going forward include developments in the Middle East geopolitical situation, crude oil price fluctuations, and the operating rates and restocking pace of the two main downstream products.