Introduction: On April 12 local time, US Vice President Vance announced in Islamabad, Pakistan, that after approximately 21 hours of marathon negotiations, the US and Iran failed to reach any agreement, and the US delegation would return home. This highly anticipated negotiation ended without results, once again casting a shadow of uncertainty over the Middle East situation. The Middle East situation has become one of the key variables affecting the volatility of bulk commodities, especially pure benzene prices. In the short term, it is essential to continue monitoring the latest developments in US-Iran relations and the passage through the Strait of Hormuz. It is expected that hydrogenated benzene prices are likely to remain high and volatile.

I. US-Iran Negotiations Fail to Reach Any Agreement, Regional Situation Remains Uncertain

At a press conference, Vance stated that the US had clearly outlined its "red lines"—demanding that Iran not only refrain from developing nuclear weapons currently but also commit to not acquiring related capabilities and technologies in the long term. However, no such clear willingness has been observed from Iran. According to Iranian sources, the US lost rationality and pragmatism due to greed, as it attempted to secure concessions through negotiations that it could not achieve in war, including issues related to the Strait of Hormuz and the transfer of nuclear materials out of Iran. As a result, no agreement was reached.

Apart from the nuclear issue, the Strait of Hormuz was also a major point of "serious disagreement" between the two sides. Iran has explicitly stated that it will not continue peace talks with the US until a comprehensive ceasefire is achieved in Lebanon. The negotiating positions of the US and Iran remain far apart, and with the war yet to yield a clear outcome, conditions for resolving issues through negotiations are not yet ripe. It is anticipated that crude oil opening prices may rise tomorrow, potentially driving new highs for pure benzene and hydrogenated benzene prices.

The Middle East situation is at an extremely delicate crossroads between war and peace. According to CCTV News, US President Trump posted on social media on April 12 local time, announcing that the US Navy would immediately begin blockading all vessels attempting to enter or leave the Strait of Hormuz.

The Strait of Hormuz handles approximately 20% of global oil transportation. A blockade would have a sustained impact on crude oil, potentially exerting deeper drag on global inflation and the economy.

II. Petroleum Benzene Supply Disrupted, Substitution Demand Shifts to Hydrogenated Benzene

The conflict in the Middle East has disrupted naphtha supply. As a core feedstock for ethylene cracking, tight naphtha supply has directly constrained the operating rates of cracking units in Asia. Refineries in Southeast Asia and South Korea have reduced production, and although domestic refineries have crude oil reserves, their operating rates are also under pressure.

Against this backdrop, China's pure benzene supply (including petroleum benzene and hydrogenated benzene) has shown a shifting pattern.

Since late February, the Middle East situation has led to reduced crude oil imports in Asia. Petroleum benzene producers south of Jiangsu first implemented varying degrees of defensive production cuts, with capacity utilization rates continuously declining. Compared with data from the same period in 2025, pure benzene capacity utilization rates in 2026 have dropped by 4–6 percentage points since late February. As of this cycle (April 3–9, 2026), pure benzene capacity utilization fell to 68.08%, hitting a six-year low since March 2020.

Hydrogenated benzene, leveraging the advantages of coal chemical routes, has seen improvements in operating rates, production, and profits. The operating rate for hydrogenated benzene increased from 62.67% to the current 68.89%, weekly production rose from 82,300 tons to 91,400 tons, and profits improved from 237 yuan/ton to the current 585 yuan/ton.

With reduced domestic petroleum benzene production and expected declines in imports, some downstream plants, concerned about potential shortages in April contract supplies, have begun seeking and replenishing stocks in the domestic market. This demand gap is primarily being filled by hydrogenated benzene. The price advantage of hydrogenated benzene has offset some of the supply reductions caused by petroleum benzene production cuts, although the scale of petroleum benzene reductions exceeds the increase in hydrogenated benzene production.

III. Downstream Profit Recovery, Some Products Show Favorable Profitability

From an industry chain perspective, thanks to the continuous recovery of overall downstream profits since late February, profitability has supported relatively high capacity utilization rates in the industry. The weighted capacity utilization rate for pure benzene downstream remained at 73–74% in March–April, higher than the 69–75% during the same period in 2025. Therefore, at present, sustained price increases have not triggered negative feedback from downstream sectors. Instead, pure benzene capacity utilization rates continue to decline due to tight raw material supply. If coupled with reduced by-product pure benzene from cracker production cuts in Japan and South Korea, leading to a monthly decrease of 100,000–150,000 tons in China's importable pure benzene from April to June, domestic supply and demand will show a continuous destocking trend during this period.

IV. Market Outlook: High Volatility, Focus on Geopolitical Variables

In summary, the pure benzene market is expected to maintain a strong and volatile trend in April–May. Supply-side contraction and demand-side resilience form a fundamentally favorable pattern. However, the core variable remains the direction of US-Iran relations. If conflicts escalate further or the Strait of Hormuz remains blocked long-term, the pure benzene supply gap will widen further, creating upward price potential. Conversely, if geopolitical tensions unexpectedly ease and risk premiums decline, prices may experience a correction. In the short term, pure benzene prices will continue to closely follow crude oil fluctuations, and the market must closely monitor geopolitical dynamics in the Middle East.