The core driver of the market this week remains geopolitical tensions, with the most critical issue still being the opening of the Strait of Hormuz. Since the outbreak of the U.S.-Iran war, crude oil has become the central commodity in this conflict.

Petrochemical products are obtained through further chemical processing of feedstock oil supplied by the refining process. Producing petrochemicals requires cracking raw oil and gas (such as propane, gasoline, diesel, etc.) to generate basic chemical raw materials, represented by ethylene, propylene, butadiene, petroleum benzene, toluene, and xylene.

For the chemical industry, which heavily relies on crude oil as a raw material, this undoubtedly means a significant surge in costs. This implies that when crude oil prices rise, these products are likely to follow suit.

| Figure: Price Changes of Crude Oil and Coal Chemical Products from February 27, 2026, to Present |
| --- |
| |
| Data Source: chempricehub Information |

However, crises often breed immense opportunities. For China's coal chemical industry, this oil price storm has precisely become a catalyst for its transformation from a "cost depression" to a "profit highland." Under the energy structure of "abundant coal, scarce oil," China's coal chemical enterprises are leveraging their unique raw material advantages to enter a golden cycle of profitability.

After the closure of the Strait of Hormuz, the supply of naphtha was cut off, impacting trade chains in East and Southeast Asia. South Korea is one of the world's largest importers of naphtha and heavily relies on Middle Eastern naphtha. Naphtha is a core raw material for producing pure benzene. With the Strait of Hormuz blocked, South Korea's pure benzene production is bound to decline, thereby affecting China's imports of pure benzene.

Overseas production reductions will also lead to a significant decrease in domestic petroleum benzene output. Hydrogenated benzene, produced via the coal chemical route, serves as a substitute for petroleum benzene. Both are referred to as pure benzene domestically, differing only in raw material sources and processes. However, petroleum benzene and hydrogenated benzene share the same physical properties and downstream applications, especially since both were listed as pure benzene on the Dalian Commodity Exchange in July last year. Hydrogenated benzene accounts for approximately 20% of the total pure benzene production capacity, with its cost advantages under the coal chemical system becoming prominent, yielding better profits than petroleum benzene.

Ultimately, the current trend in the domestic pure benzene market is driven by cost transmission. The price correlation between styrene and pure benzene exceeds 90%, while its correlation with crude oil prices exceeds 80%. In other words, when crude oil prices rise, naphtha supply is cut off, and pure benzene prices surge, the cost line for styrene is directly pushed upward. To offset high costs, styrene and its downstream products also rise in tandem.

Against the backdrop of high oil prices, the profitability of hydrogenated benzene, one of the coal chemical products, has significantly increased. In Shandong, a ton of hydrogenated benzene earns nearly 300 yuan, while a ton of petroleum benzene incurs a loss of 149 yuan. This price difference represents an opportunity.

Recent weekend news indicates that geopolitical tensions have not eased. The U.S. attempt to resolve the conflict quickly through ground forces undoubtedly escalates the overall geopolitical situation. Reflecting on the 2022 Russia-Ukraine conflict, which drove crude oil prices up to $130 per barrel, the impact of the current U.S.-Iran war may be no less significant. Therefore, in the short term, the domestic pure benzene market is expected to maintain a relatively strong pattern. In the medium term, attention must be paid to shipping in the Strait of Hormuz—once the strait reopens and oil prices fall, domestic pure benzene may experience a high-level correction, and the profit elasticity of hydrogenated benzene is likely to shrink accordingly.