Lead: Geopolitical conflicts and peace talks continue to fluctuate, causing international oil prices to oscillate widely. Currently, crude oil costs at Shandong refineries remain high, overall demand is weak, refineries are offering discounts to move products, and the PX side is maintaining just-in-time procurement, providing bottom support to the market.

1. Domestic Xylene Prices Continue to Decline

Recently, domestic xylene market prices have fallen. International crude oil futures prices trended strong initially before weakening. Under the influence of easing geopolitical conflicts, crude oil prices subsequently fell sharply for several consecutive days, pulling down the average price and weakening support in the market. Downstream PX market prices decreased, and USD-denominated prices also dropped to varying degrees. Following downstream product fluctuations, the East China market saw negotiation prices decline, compounded by inventory accumulation at ports. In the Shandong market, earlier shipments were weak, causing prices to fall. Combined with price declines in the East China market, the arbitrage window narrowed, cross-regional demand decreased, and factory prices dropped. In South China, prices declined during the week. Impacted by geopolitical policies and related products, prices fell continuously. Market negotiation sentiment was rigid, downstream trading was quiet, and overall transactions were average.

2. Xylene-Toluene Price Spread Widens but Remains Negative

During the week, the average price spread between xylene and toluene in Shandong was 20 yuan/ton, with an average production-sales ratio at xylene refineries of 79%. Last week, the average spread was -57 yuan/ton, with an average production-sales ratio of 103%. Although the price spread between xylene and downstream PX has narrowed, it remains at a high level. Large-scale procurement by downstream PX enterprises has supported premiums in xylene bidding, somewhat repairing the spread with toluene.

In terms of units, Qicheng Petrochemical's reforming unit was shut down for maintenance in mid-May, reducing mixed xylene supply. Qingdao Lidong's unit restarted, requiring external xylene procurement. On the news front, one set of reforming units at Yulong Petrochemical is planned to be shut down this week.

3. Market Outlook

Positive factors: Severe losses at reforming units provide good cost support; one PX production enterprise in Shandong resumed operations, increasing demand.

Negative factors: The gasoline side remains weak, with no improvement in xylene consumption.

Currently, frequent news on geopolitical conflicts and wide fluctuations in international crude oil significantly affect market sentiment. In the future, both the gasoline and PX industries are expected to decline to varying degrees, offering weak price support for xylene. With one set of reforming units scheduled to shut down for maintenance, supply in the market will decrease significantly. It is expected that prices at refineries in Shandong will stabilize after a slight decline in the near term.