Lead: Recently, as geopolitical conflicts show no signs of easing, international crude oil futures have risen in 11 out of the past 12 trading days. Supported by this continuous rally in crude prices, the xylene market has surged significantly.
I. Xylene Spot Price Trends
Recently, geopolitical conflicts have yet to show signs of de-escalation. International crude oil futures prices have risen 11 times within 12 trading days, and the domestic xylene market has followed the strength of the gasoline and PX markets. In the Shandong region, seven gasoline cargoes have been loaded and shipped recently, with an additional 40,000 tons of gasoline feedstock still pending procurement for vessel orders before month-end. Compounding this, PX plants entered the market for bidding and procurement this week, bringing total procurement volume to over 50,000 tons. Supported by downstream restocking, overall prices were actively pushed upward, with the weekly average production-to-sales ratio reaching 129%. Refinery inventories remained low, with some plants primarily selling forward cargoes and pushing prices up resolutely. The East China market continued its upward trend. Although the port saw slight inventory accumulation this week, the East China market rose substantially on the back of higher downstream PX futures prices. Downstream customers showed some resistance to high-priced feedstock, and spot trading was relatively subdued.
II. Analysis of Recent Domestic Xylene Production and Sales
From a production-sales perspective, supported by 11 consecutive days of rising crude oil futures, overall market production-to-sales ratios were healthy. With gasoline vessel order replenishment and PX plants returning to procurement, demand-side support was evident. Over the past 12 trading days, the average production-to-sales ratio for xylene at Shandong refineries reached as high as 113%.
III. Short-Term Xylene Forecast
Crude Oil: International oil prices are expected to have room to rise next week, with WTI likely trading in the range of $82–89/barrel and Brent in the range of $88–95/barrel. The core logic behind this forecast is as follows: the US-Iran standoff remains unresolved, instability in the Middle East persists, and there is still no expectation of a full reopening of the Strait of Hormuz. Supply-side pressures continue to underpin oil prices. Key points to monitor: 1. Supply side: The US has denied any negotiations with Iran and maintained its tough sanctions stance, while Iran has stated it will retaliate through measures such as raising tariffs or seizing assets if its interests are harmed. Hopes for a reopening of the Strait remain slim, and supply risk concerns persist. 2. Demand side: Refinery run rates in major Asian consuming countries remain low, with overall demand weak; meanwhile, the traditional peak fuel consumption season in the US continues to release seasonal tailwinds, providing localized support. 3. Geopolitics: The US-Iran standoff persists, with the US intensifying economic pressure; both sides have stated they have no plans for negotiations, and policy unpredictability remains the core destabilizing factor. Mediation efforts by Pakistan, Qatar, and other intermediaries have made no breakthroughs, and risks of conflict spillover continue. 4. Financial factors: Recent US economic data has shown signs of recovery, but whether a September rate hike will materialize remains uncertain. As things stand, if there is no hike in September, the likelihood of a rate hike resuming in October is higher.
Gasoline: International oil prices are expected to have room to rise, and wholesale/retail price caps for refined products are expected to increase in the current round. This provides a positive message to the oil market. Refined product prices in the Shandong region are expected to remain firm, with refineries still inclined to push prices upward. However, weak terminal demand is slowing the pace of social inventory drawdown. Intermediaries remain cautious in locking in orders, while downstream users replenish in moderate volumes, resulting in a moderate market atmosphere. Next week, gasoline and diesel prices at Shandong independent refineries are expected to rise in a fluctuating manner.
PX: The PX market is expected to be slightly weak next week. Cost support is strong, but numerous PX units are restarting, creating a bearish supply-side factor. PX prices are expected to edge lower, with the PX price next week likely to trade around $1,095/ton CFR China. Cost side: International oil prices are expected to have room to rise next week, with WTI likely in the $82–89/barrel range and Brent in the $88–95/barrel range. Supply side: Next week, Hainan Refining & Chemical's 1.6-million-ton unit, Fuhaichuang's 1.6-million-ton PX unit, and Yangzi Petrochemical's 890,000-ton unit will remain under maintenance. Weilian Chemical's 1-million-ton unit and Shenghong Refining & Chemical's 2-million-ton unit will be coming on stream. Weekly PX output is estimated at 634,700 tons. Demand side: Next week, units at Xincailiao, Xinfengming, and Shenghong have restart plans, with domestic supply maintaining an increasing trend. Weekly output is expected to be around 1.24 million tons.
In summary, some domestic xylene units remain under maintenance in the short term, with restarts expected mainly around late August to early September. Spot and cargo supply remains tight. Combined with strongly bullish expectations for crude oil futures, the market has upward momentum. However, with gasoline vessel order transactions expected to slow and PX prices expected to retreat, further sharp gains in the xylene market face resistance on the demand side.
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