Introduction: In July, the domestic hydrogenated benzene market showed an overall trend of rising first and then falling. In the first half of the month, driven by geopolitical risk premiums, hydrogenated benzene prices rose periodically; near the end of the month, international crude oil plunged sharply, leading to a significant loosening of cost support, and the market quickly gave back earlier gains. As of July 30, the price of hydrogenated benzene in Jiangsu closed at 7,850 CNY/ton, with new quotes in the main producing areas at 7,700-7,750 CNY/ton. On a monthly basis, the price of hydrogenated benzene fell by 7.62% in the week of July 27, while benzene fell by 5.85%.
On the supply side, domestic hydrogenated benzene output in July was 371,800 tons, up 2.84% month-on-month; the average monthly profit of hydrogenated benzene enterprises in Shandong was 181.5 CNY/ton, a sharp increase of 384.71% month-on-month. Improved industry profitability drove a higher willingness to increase operating rates. On the demand side, domestic hydrogenated benzene demand in July was 2.499 million tons, down 0.83% month-on-month, indicating signs of marginal weakening.
Entering August, supply-side pressure for hydrogenated benzene will increase significantly. According to the latest data, as of July 30, the operating rate of domestic benzene hydrogenation units had reached 65.98%, up 3.49% from the previous week; weekly output was 87,500 tons, up 4,600 tons from the previous week. During the week, units such as Henan Yutian, Shandong Hengxin, and Puyang Shengyuan restarted successively, with start-up capacity exceeding reductions. Next week, a unit in the northwest region is also expected to restart, and the domestic benzene hydrogenation operating rate is likely to further rise to around 67.5%.
On the petroleum benzene side, supply is also returning. In August, the load of major refining plants has increased significantly, and the amount of maintenance has decreased markedly. The industry operating rate is expected to return to a neutral range by mid-August. Overall, in August, both petroleum benzene and hydrogenated benzene output will achieve month-on-month growth, and the tight supply situation for benzene will improve.
On the demand side, a contractionary trend is evident. Some styrene, phenol, and aniline units are scheduled for maintenance. Specifically, Lihuayi Refining & Chemical's styrene unit has a maintenance plan; for aniline, Wanhua Chemical's 1.08 million-ton unit is planned for maintenance in early August; its phenol-ketone unit also has a shutdown plan. Shanxi Tianji's aniline unit is scheduled for maintenance in early August, and Chongqing Huafon's adipic acid unit also has a shutdown plan in early August. The overall operating rate of downstream units is on a downward trend.
Table: Monthly supply-demand balance sheet for hydrogenated benzene (rolling three months, unit: 10,000 tons)
| Category | July | MoM | Aug E | Sep E |
|---|---|---|---|---|
| Benzene output | 156.8 | -7.49% | 177.9 | 204.8 |
| Hydrogenated benzene output | 37.18 | 8.27% | 39.26 | 36.86 |
| Import volume | 37 | 5.71% | 38 | 40 |
| Total supply | 230.98 | -3.29% | 255.16 | 281.66 |
| Downstream consumption | 249.9 | -0.83% | 247.9 | 258.7 |
| Export volume | 0 | 0% | 0 | 0 |
| Total demand | 249.9 | -0.83% | 247.9 | 258.7 |
| Supply-demand gap | -18.92 | 7.26 | 22.96 |
With supply increasing and demand decreasing, the benzene supply-demand gap in August will turn from negative to positive, and inventory accumulation will begin. Port inventories have already shown a turning point signal — as of July 27, the benzene port inventory in Jiangsu was 52,800 tons, up 2,000 tons from the previous period. Although the absolute inventory level remains low, once the accumulation trend is established, it will exert sustained downward pressure on prices. Under the pattern of supply shifting from tight to loose, there is clearly insufficient upward momentum for hydrogenated benzene prices.
Additionally, crude oil is the biggest uncertainty variable in the current market. The situation in the Middle East remains volatile. On July 23, WTI crude once surged to $93.5 per barrel, and Brent crude touched a high of $102 per barrel. Repeated US-Iran conflicts and blocked passage through the Strait of Hormuz have caused large swings in oil prices. On July 28, Brent crude once fell to $85.35 per barrel, a single-day drop of 6.9%.
In the short term, the Middle East situation remains the primary factor determining oil price direction. If US-Iran conflicts escalate repeatedly and passage through the Strait of Hormuz remains blocked, it could temporarily reverse the loose benzene expectation and push benzene (including hydrogenated benzene) prices to rebound from lows. However, in the medium term, as high oil prices curb consumption, oil-producing countries gradually increase output, and trade flows readjust, supply-demand fundamentals do not support sustained one-sided oil price increases.
In summary, the hydrogenated benzene market in August faces the following core contradictions: On the supply side, units are restarting intensively, petroleum benzene loads are increasing, and output growth month-on-month is highly certain; on the demand side, multiple downstream units are scheduled for maintenance, leading to a month-on-month decline in demand. Against the backdrop of the supply-demand gap turning from negative to positive and the inventory turning point being established, the market lacks trend-driven upward momentum and is expected to mainly fluctuate downward.
However, geopolitical risks provide intermittent disturbances. The Middle East situation remains the biggest uncertain variable. If geopolitical conflicts escalate again and passage through the Strait of Hormuz is blocked, causing crude oil to surge, or if the return of domestic refineries falls short of expectations, it could temporarily reverse the loose expectation and push hydrogenated benzene prices to rebound from lows.
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