Geopolitical conflicts have emerged as the primary driver, pushing xylene prices to their year-to-date highs.

Introduction: Middle Eastern geopolitical tensions have repeatedly dominated energy and aromatics markets, with the navigability of the Strait of Hormuz and progress in US-Iran negotiations serving as core variables. International crude oil prices maintained high-level, wide-range fluctuations, driving up costs across naphtha and the entire aromatics supply chain. Xylene briefly surged to its third-quarter highs on cost-push factors; however, limited follow-through from downstream gasoline and chemical demand resulted in clear resistance to higher raw material prices, suppressing further gains. The market exhibits a divergent pattern characterized by "strong cost-driven momentum but weak demand absorption."

1. International Crude Oil Price Comparison

Table 1: International Crude Oil and Related Product USD Prices (USD/barrel)

Data Source: Chempricehub News

In October, international crude oil overall maintained high-level, wide-range fluctuations. Geopolitical news disturbances significantly increased intraday volatility. Bullish and bearish factors engaged in mutual bargaining, with geopolitical risk premiums and supply recovery expectations alternately pulling the price center. The fluctuation in crude oil prices during this period directly impacted the cost side of domestic petrochemical varieties such as xylene.

Table 2: International Aromatics Product Price Comparison (USD/ton)

Data Source: Chempricehub News

During the National Day holiday, international crude oil fell from highs under the dual pressure of easing Middle Eastern geopolitical conflicts and the G7 plan to release strategic reserves. However, it remained in high-level oscillation, and cost support was not breached. The Asian aromatics sector showed a divergent pattern. Domestically, due to the National Day holiday, trading entities were absent, resulting in thin overall trading activity and restricted market liquidity. In the USD-denominated market, tight toluene supply supported stronger prices. Additionally, rising freight rates to South Asia led the market to anticipate an expansion in the India CFR toluene spread. While solvent demand in Southeast Asia was weak, seller offers remained firm. Some producers indicated that if the spread between aromatics and feedstock remained insufficient, they might consider shutting down BTX units.

2. Shandong Toluene and Related Product Price Comparison

Table 3: Shandong Gasoline and Aromatics Product Price Comparison (RMB/ton)

Data Source: Chempricehub News

Specifically, spot prices for Shandong gasoline and aromatics showed mixed movements. Average gasoline production-to-sales ratio was approximately 70%. For xylene refineries, supported by purchasing from PX plants, the overall production-to-sales ratio reached 93%. Notably, upon return from the holiday, the overall production-to-sales ratio hit 159%. Pre-holiday inventory clearance was smooth, and most refineries had pre-sold orders scheduled for October 3–4. Actual inventory levels were significantly better than suggested by production-to-sales data. Combined with continued tight refinery feedstock supply and very limited willingness to cut prices, the market presented a typical "high price, low volume" state where prices continued to rise, inventories did not accumulate, and refineries held firm on pricing. Supply-side contraction intensified: unplanned shutdowns at Xin Chemical facilities exacerbated the already tight supply situation. On the first day back from the holiday, related aromatics futures hit the limit-up, concentrating positive sentiment and allowing xylene prices to surge accordingly.

Table 4: Shandong Refinery Xylene Product Price Comparison (RMB/ton)

Data Source: Chempricehub News

After the holiday, PX enterprises in the Shandong region concentrated their entry into the market for restocking. Their acceptance of xylene premiums was reasonable, and combined with support from replenishment via gasoline vessel orders, xylene continued to chase higher prices. Auction transactions for refinery xylene touched the RMB 8,900/ton threshold. Xinyue Chemical has restarted feeding materials, with product output expected within the week. However, Yulong’s release volume was limited, keeping regional xylene supply tight.

3. Post-Holiday Forecast

It is estimated that in the short term, the xylene market will maintain high-level oscillations following crude oil trends, exhibiting characteristics of "supported bottom but resistant upside." If substantial progress is made in US-Iran negotiations and strait navigation continues to recover, the geopolitical premium in oil prices will rapidly fade, causing xylene to simultaneously retrace earlier gains. If conflicts escalate again and push oil prices higher, focus on xylene should shift to the MX-PX spread situation, with price increases likely remaining significantly weaker than those of crude oil. In the medium term, as previously shut-down units for maintenance gradually restart, the tight supply pattern is expected to ease. Combined with the fading benefits of the "Golden September, Silver October" peak season and marginally weakening gasoline demand, the MX-PX spread may cause a slowdown in chemical-side restocking pace. There is potential for xylene prices to retreat from highs, but low port inventories and refineries' willingness to hold firm on prices will still constrain the extent of the correction.