Lead: Since August, the domestic hydrogenated benzene market has been fluctuating with an upward bias overall, with the price center moving higher. During the month, the price range for hydrogenated benzene in the Shandong region was 7,225–8,150 yuan/ton. At the beginning of the month, the United States canceled a new round of military strike plans against Iran and signaled a resumption of negotiations, causing international oil prices to plunge. This dragged down the entire domestic chemicals futures complex, with pure benzene futures falling sharply and hydrogenated benzene spot prices dropping accordingly. Subsequently, US–Iran negotiations failed to make substantive progress, market sentiment recovered, and crude oil prices rose consecutively. In addition, due to typhoon impacts, vessel arrivals at East China pure benzene ports were disrupted, with inventories falling to 29,000 tons. Combined with low downstream feedstock inventories, price support was evident, and pure benzene futures and spot prices rose in tandem, prompting hydrogenated benzene producers to actively raise their quotations.
What is the future trajectory of the hydrogenated benzene market, and what factors will influence prices?
I. Petroleum benzene restarts advance; hydrogenated benzene loss-making, operating rates hard to lift
Looking at overall pure benzene supply, the restart progress of domestic refineries continues to advance. The operating rate and weekly output of petroleum benzene have recovered steadily from low levels. As of August 27, weekly petroleum benzene output had risen to 408,700 tons, with an operating rate of 67.92%. Multiple units under maintenance at Shenghong Refining & Chemical have been progressively restarted. On the import side, pure benzene imports were approximately 400,000 tons in July, are expected to reach about 380,000 tons in August, and may fall to 370,000 tons in September.
For hydrogenated benzene, the operating rate has rebounded after minor fluctuations recently. During the week of August 7–13, the hydrogenated benzene operating rate fell 2.84 percentage points to 63.14% due to output cuts and shutdowns at some units. During the week of August 14–20, the operating rate edged up 0.3 percentage points to 63.44%. During the week of August 21–27, capacity in operation exceeded capacity idled, and the operating rate continued to rise modestly by 0.26 percentage points to 63.70%. Hydrogenated benzene output increased slightly.
II. Key downstream operating rates may rise; watch pre-National Day stocking demand
Table: Summary of downstream operating rate changes
| Category | Product | August | July | Change | September Forecast | September Change |
|---|---|---|---|---|---|---|
| Downstream product | Styrene | 61.80% | 62.92% | -1.12% | 67.84% | 6.04% |
| Downstream product | Caprolactam | 68.30% | 68.15% | 0.15% | 68.64% | 0.34% |
| Downstream product | Phenol | 70.96% | 65.95% | 5.01% | 78.97% | 8.01% |
| Downstream product | Aniline | 76.00% | 81.50% | -5.50% | 79.56% | 3.56% |
| Downstream product | Adipic acid | 64.55% | 62.02% | 2.53% | 69.81% | 5.26% |
Source: Chempricehub Information
On the demand side, looking at the operating loads of key pure benzene downstream sectors in August: styrene operating rate was 61.80% (down 1.12 percentage points month-on-month); caprolactam was 68.30% (up 0.15 percentage points); phenol was 70.96% (up 5.01 percentage points); adipic acid was 64.55% (up 2.53 percentage points); aniline declined to 76% (down 5.5 percentage points).
September coincides with the Mid-Autumn Festival and National Day holidays, so attention should be paid to the release of downstream stocking demand. Phased restocking will provide some support to hydrogenated benzene prices. However, profit levels for some downstream products remain generally weak, limiting the impetus for further upward price movement.
III. Hydrogenated benzene profits hovering around breakeven; watch subsequent trends
Hydrogenated benzene industry profits have recently fluctuated around the breakeven level. During the week of August 7–13, the spread between feedstock crude benzene and hydrogenated benzene narrowed, with Shandong hydrogenated benzene profit at 26 yuan/ton. During the week of August 14–20, profit further declined to -15 yuan/ton, pushing the industry back into slight losses. During the week of August 21–27, as gains in by-product prices expanded, profit recovered to 31 yuan/ton.
The repeated swings in profitability have a direct impact on operating rates. During the earlier loss-making period, some enterprises announced maintenance shutdowns, and the hydrogenated benzene operating rate declined accordingly; after profit improved, the operating rate rebounded slightly. The hydrogenated benzene industry is currently on the edge of profitability. If feedstock crude benzene price increases continue to outpace hydrogenated benzene prices, the spread will narrow further, intensifying industry losses. In that case, the possibility of some enterprises reducing loads or shutting down for maintenance again cannot be ruled out.
Outlook for September
Looking ahead to September, the hydrogenated benzene market still faces a pattern of intertwined bullish and bearish factors:
External factors: US–Iran negotiations remain deadlocked, and navigation through the Strait of Hormuz has not yet resumed. If the talks make substantive progress and passage through the strait is partially restored, international oil prices could have room to fall, directly impacting the cost side of pure benzene. Close attention should be paid to whether either side signals meaningful dialogue.
Supply: Petroleum benzene restarts continue to advance, with domestic pure benzene supply trending higher. For hydrogenated benzene, if profits can remain positive, the operating rate is expected to hold at current levels or even rise slightly. However, if profits turn negative again and losses widen, some units may be shut down once more, affecting hydrogenated benzene supply. Thus, hydrogenated benzene profit fluctuations will directly influence producers' operating decisions.
Demand: Pre-holiday downstream stocking demand ahead of the Mid-Autumn Festival and National Day remains a short-term supporting factor. September enters the stocking window period, and the intensity of downstream purchasing will directly determine short-term demand strength, so actual transaction volumes need to be tracked. As September begins, downstream units that underwent maintenance are gradually returning, which should improve pure benzene demand. Yet, the generally weak profit profile across the downstream sector remains unchanged, which may limit the scope for demand growth.
Prices: Against a backdrop of both supply and demand growth, inventory accumulation expectations are gradually being realized—as of August 24, Jiangsu pure benzene port inventories had risen to 41,000 tons, an increase of 12,000 tons from the prior period. As inventories build, prices face downward adjustment pressure. However, with the two holidays approaching, if downstream stocking demand materializes, hydrogenated benzene prices may be stimulated to stop falling and rebound.
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