Introduction: Recently, crude oil futures have been trading in a wide range amid geopolitical conflict headlines. The domestic gasoline market has shown notable resilience to downside pressure, and with tight spot PX supply providing additional support, the domestic xylene market has been prone to rise rather than fall.
I. Xylene Spot Price Trends
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Crude oil:
In 2026, international crude oil prices fluctuated sharply, overall exhibiting a roller-coaster pattern. From January 2026 to August 6, Brent crude oil futures traded between USD 59.96–118.35/barrel, an amplitude of 66.7%. The high was recorded on March 31, and the low on January 7. The annual average price was USD 86.92/barrel, up sharply by 27.48% from the 2025 average of USD 68.19/barrel. The US-Iran situation was the core factor affecting oil prices. In the early period, restricted shipping through the Strait, combined with disrupted crude exports from multiple Middle Eastern producers, heightened geopolitical uncertainty and kept crude oil prices at elevated levels. From late May to June, US-Iran relations continued to thaw, and shipping through the Strait gradually returned to normal. Meanwhile, the partial lifting of US sanctions on Iran boosted supply growth expectations, significantly cooling geopolitical risk aversion and supply shortage concerns, and international oil prices retreated from above USD 100/barrel. From July to August, the US-Iran situation fluctuated, showing an initial rise followed by a decline, with Brent trading in a range of USD 71.57–100.69/barrel.
During the current period (July 31 to August 6, 2026), international oil prices fell sharply, with average prices also declining. As of August 6, WTI was USD 77.29/barrel, down 8.72% from July 31; Brent was USD 82.49/barrel, down 8.47% from July 31. The decline in international oil prices this week was mainly due to reports of positive progress in US-Iran negotiations, with the US Treasury having lifted some sanctions on Iran. Combined with expectations that the Strait of Hormuz could reopen, market concerns were somewhat alleviated.
Gasoline: In early August, signals of easing in US-Iran negotiations led to a rapid squeeze on the risk premium from potential crude supply disruptions. Brent crude prices corrected sharply and continuously, but gradually diverged from domestic refined product price trends. Crude was driven down faster by geopolitical sentiment, while gasoline and diesel spot and wholesale prices lagged significantly behind crude in downward adjustments, keeping cracking margins elevated. Refined products benefited from relatively strong price resilience, low inventory levels, and improving marginal demand, thus demonstrating strong resistance to downside pressure.
Xylene: During the period, geopolitical conflicts eased somewhat, and international crude oil futures prices pulled back slightly, with the domestic xylene market following the broader commodities market lower. In the Shandong region, prices fell more slowly, supported by decent gasoline cargo deals and downstream restocking. In the East China market, prices were relatively firm earlier, underpinned by relatively strong PX futures and firm Shandong xylene prices. However, as PX futures fell sharply, the East China market accelerated its decline. The Shandong market declined much less than East China, supported by low supply and demand-side support, though the overall average still edged down. In South China, prices declined slightly this week. As international crude oil fell during the week, cost-side support weakened, prompting refineries to lower ex-plant prices. Market trading sentiment was subdued, downstream demand was weak, and transactions were mostly small-lot, on-demand replenishment, with limited large-volume deals.
II. Analysis of Recent Domestic Xylene Production and Sales
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From a production-sales perspective, the overall production-sales ratio in 2026 has been around 90%. Combined with some cargo volumes consumed internally by plants for their own use, the market has generally been in a balanced state. Recently, supported by plant turnarounds and output reductions, as well as some gasoline cargo demand, overall xylene production and sales have been sound. Since July, the overall production-sales ratio has been around 109%, indicating a destocking trend. The over-balanced production-sales situation at plants has also provided consumption-side support for xylene's tendency to rise rather than fall.
III. H2 Supply-Demand Balance and Price Forecast for Xylene
Crude oil: The agreement on navigation through the Strait of Hormuz has not yet been finalized, and the standoff between the Houthi forces and Saudi Arabia continues to ferment. Risks along the Red Sea shipping route remain, and geopolitical uncertainty continues to elevate the risk premium on the crude supply side, providing upward support for international oil prices. Brent crude oil futures are expected to trade in the range of USD 76–86/barrel in the short term.
On the supply side: Recently, some units have been gradually commissioned, and xylene supply has been growing steadily. In certain regions, the start-up of new plants has intensified the supply-demand contradiction, putting pressure on price increases. In Northeast China, the Huajin Aramco refining and chemical plant is planned to start up between late September and October, which will exacerbate the refined product surplus and further weigh on the blending component market.
On the gasoline front: Based on the crude oil price forecast for early to mid-August, with multiple rounds of US-Iran diplomacy ongoing, the US has canceled strike plans and relaxed sanctions on Iran. Geopolitical tensions in the Middle East continue to cool, weakening support for oil prices. Crude is expected to continue deepening its downturn in the coming week, with cost-side support absent. However, from a supply-demand fundamentals perspective, domestic refined products are supported by high cracking margins and low inventories, and price declines are expected to be smaller than those of crude, with resilience continuing to stand out. The retail price ceiling adjustment on August 14 is expected to be negative. After the adjustment takes effect, market wait-and-see sentiment is expected to ease, and spot transactions are likely to adjust in a volatile manner alongside seasonal marginal improvements in demand. It should be noted that as the summer peak season draws to a close, gasoline demand will gradually weaken, making price increases difficult. Diesel, meanwhile, faces limited infrastructure construction activity and weak end-user demand, with fundamental resilience weaker than gasoline, making its price decline more clearly defined.
On the PX front: Next week, Hainan Refining & Chemical's 1.6 million t/y unit, Fuhaichuang's 1.6 million t/y PX unit, Yangzi Petrochemical's 890,000 t/y unit, and Shenghong Refining & Chemical's 4 million t/y unit will continue turnarounds. Weilian Chemical's 2 million t/y unit and Zhongjin's 1.6 million t/y PX unit are resuming output. Weekly PX production is expected to be 577,200 tonnes. The resumption of some PX units next week will provide support for domestic xylene consumption.
In summary, in the short term, due to differences in supply recovery, a certain demand gap for xylene remains. Disturbed by geopolitical conflict headlines, the xylene market is still prone to rise rather than fall, with price declines lagging behind downstream products and raw material varieties.
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