Lead: Recently, geopolitical tensions have once again stirred the Strait of Hormuz, causing international oil prices to fluctuate. Influenced by cost-side disruptions, the price of pure benzene has subsequently changed. As a component of domestic pure benzene, the hydrogenated benzene market has also exhibited a series of noteworthy changes.

1. Changes in the Middle East Situation Lead to Significant Oil Price Volatility

As a global "energy artery," the Strait of Hormuz handles over 20% of the world's seaborne crude oil trade, and its navigability has a decisive impact on energy markets. Before the Dragon Boat Festival, expectations of a shutdown in the strait triggered a sharp decline in oil prices for several consecutive days. However, on the 20th, news emerged that the strait was again closed, causing oil prices to surge in dark trading. On the 21st, further reports of U.S.-Iran negotiations surfaced, combined with a hawkish shift in U.S. monetary policy, leading oil prices to fall again in dark trading.

As the direct upstream feedstock for pure benzene, crude oil price trends largely determine the cost center of pure benzene. During the Dragon Boat Festival, pure benzene and hydrogenated benzene prices saw a significant decline following crude oil. However, over the holiday period, due to a sudden change in geopolitical risks, crude oil dark trading prices rose. As a result, pure benzene prices from Shandong local refineries halted their decline and rebounded, with mainstream prices reaching 7,050 yuan/ton, thereby transmitting positive momentum to the hydrogenated benzene market.

2. Declining Operating Rates in the Hydrogenated Benzene Sector Reduce Supply

Currently, the hydrogenated benzene industry is undergoing a round of supply-side adjustments. According to data from Chempricehub, theoretical profits for hydrogenated benzene plants in the Shandong region have recently fallen to -190 yuan/ton, indicating that the industry has entered a state of widespread losses. Combined with a sharp decline in domestic hydrogenated benzene prices, plant operating rates have clearly dropped, currently falling below 60%. This stands in stark contrast to the high operating rates seen during the same period last year.

The continued decline in operating rates implies that hydrogenated benzene production is contracting. Market feedback indicates that some previously operational plants have chosen to reduce loads or shut down for maintenance due to negative profit margins, and the restart pace of plants that have completed maintenance is also constrained by profitability conditions.

3. Relatively Tepid Downstream Demand Lacks Flexibility

Compared with the contraction on the supply side, demand-side performance has been relatively subdued. Currently, operating loads in major downstream sectors for hydrogenated benzene (such as styrene and caprolactam) have not shown significant fluctuations, remaining generally stable. However, "stable" does not mean "strong." The demand side for pure benzene and hydrogenated benzene is currently characterized by "mainly rigid procurement with limited speculative/investment demand."

Due to poor price transmission for end-products, some downstream industries are also under profit pressure themselves, which limits their willingness to purchase raw materials. Therefore, although supply is decreasing, demand flexibility is also insufficient. It is necessary to monitor the impact of downstream raw material inventories on pure benzene and hydrogenated benzene prices.

Overall, in the short term, the hydrogenated benzene market is expected to closely track fluctuations in crude oil and pure benzene prices. Under the combined effect of continuously declining pure benzene port inventories in East China and supply contraction in the hydrogenated benzene sector, if rigid-demand downstream raw material inventories fall to low levels, periodic rebound opportunities may emerge for both pure benzene and hydrogenated benzene markets. However, until substantive improvement occurs on the demand side, the sustainability or strength of any rebound is likely to be limited. It is recommended to closely monitor changes in the geopolitical situation and crude oil price dynamics, while also paying attention to marginal changes in downstream operating rates and procurement cycles.