Lead: Since August, the US-Iran situation has remained the core variable driving both the crude oil and hydrogenated benzene markets. In late July, the US-Iran conflict briefly pushed Brent crude toward $90/barrel. Entering August, the US-Iran negotiation process has been volatile — early in the month, reports emerged that talks were making positive progress and that the Strait of Hormuz might reopen, sending international oil prices down. More recently, however, Iran has again signaled a hardline stance, and the US-Iran negotiations remain deadlocked. The navigational outlook for the Strait of Hormuz still carries significant uncertainty, and geopolitical risk premiums continue to fluctuate.
As a result, international crude oil prices have been highly volatile, with Brent trading around $88/barrel. Crude oil serves as the core cost anchor for petroleum benzene, and its price swings transmit rapidly down the supply chain, causing the hydrogenated benzene market to rise and fall frequently. The US-Iran standoff is set to drive the next wave of market movement; until the situation becomes clear, news-driven high volatility is expected to become the norm.
1. Hydrogenated benzene operating rates have declined, but northern China's benzene supply remains relatively ample
In terms of hydrogenated benzene supply, the industry's overall operating rate has seen a notable decline recently. According to Chempricehub data, for the week ending August 13, the hydrogenated benzene operating rate fell 2.84 percentage points to 63.14%. The reduction or suspension of production at some units was the main reason for the decline. However, over a longer time horizon, the hydrogenated benzene operating rate remains at a medium-to-high level, and spot supply in the market is relatively loose.
On the petroleum benzene front, many units that had been under maintenance have gradually resumed operations, with both operating rates and weekly output continuing to recover from low levels. According to Chempricehub data, for the week ending August 13, the petroleum benzene capacity utilization rate stood at 63.30%, up 1.51 percentage points from the previous cycle. During this period, multiple units including Zhongjin Petrochemical, Fuha Weil Lian, and Panjin Haoye restarted, though loads have not yet reached full capacity, with the output increase mainly expected to materialize over the following two weeks.
Overall, while hydrogenated benzene output has declined slightly, petroleum benzene supply continues to increase, and the supply side of the market is generally expanding.
In terms of profitability, hydrogenated benzene is currently in a narrow profit range. For the week ending August 13, Shandong hydrogenated benzene profits were approximately RMB 26/ton, while during August 7-13, hydrogenated benzene profits averaged around RMB 100/ton. Overall profit levels are stable but thin.
2. Demand in the north is generally weak, dominated by essential needs
Some styrene, aniline, and phenol/acetone units in the north have been shut down, reducing procurement demand for pure benzene. In addition, profitability across major downstream products is generally weak, and cost pass-through is poor. Details are as follows:
Table: Weekly theoretical profit changes across the pure benzene supply chain (unit: RMB/ton)
| Product | Aug 13 | Aug 6 | Change | Change % | Next-period forecast |
|---|---|---|---|---|---|
| Pure benzene | 749 | 325 | 424 | 130.46% | 800 |
| Styrene | -397 | -448 | 51 | 11.38% | -400 |
| Phenol | -63 | 193 | -256 | -132.64% | -350 |
| Caprolactam | -412 | -268 | -144 | -53.73% | -300 |
| Aniline | 3017 | 2835 | 182 | 6.42% | 3200 |
| Adipic acid | -1714 | -1566 | -148 | -9.45% | -1800 |
Source: Chempricehub
In styrene, the pattern of weak supply and weak demand persists. Jinzhou Petrochemical's styrene unit began a 40-day turnaround on August 11, while Ningxia Baofeng's unit restart has been postponed. The styrene operating rate remains at a low level of around 62.29%.
In phenol, Ningbo Taida's phenol/acetone unit was shut down on August 8 due to feedstock supply issues, and Wanhua Chemical's phenol/acetone unit commenced a 45-day turnaround on August 10. The phenol operating rate has fallen from 73.14% to 69.64%.
In aniline, Jinmao's 60,000-ton/year unit has encountered difficulties in its restart, while Nanhua's 30,000-ton/year unit is down for catalyst replacement. The aniline operating rate has dropped from 81.54% to 73.70%.
Caprolactam and adipic acid have also seen varying degrees of operating rate declines. Overall, downstream units are a mix of startups and shutdowns, but incremental demand is limited. Downstream buyers are largely maintaining essential-needs procurement with little appetite for building inventories at higher prices, providing only limited support for hydrogenated benzene prices.
3. East China port inventories are falling, providing near-term support
East China's pure benzene port inventory is a key variable for the current market. As of August 3, commercial inventory at Jiangsu pure benzene port terminals stood at 58,500 tons — a slight build of 3,000 tons versus the previous period, but a substantial drawdown of 107,200 tons from the 163,000 tons recorded a year earlier, down 65.77% year on year.
Entering mid-August, port inventories in East China continued to decline as typhoon-related disruptions delayed the arrival of imported cargoes. As of August 12, Jiangsu pure benzene port inventory had further fallen to 40,000 tons, down 15,800 tons from the prior period, a 28.32% decrease from the previous cycle, and down 106,000 tons from the 146,000 tons reported in the same period last year, a year-on-year decline of 72.6%.
With port inventories at historical lows and spot supply tight, strong bottom-line support is being provided to pure benzene and hydrogenated benzene prices. Low inventories combined with geopolitical premiums pushed East China pure benzene prices as high as RMB 7,840/ton at one point. As the impact of the recent typhoon subsides, most coastal areas are gradually resuming normal loading and unloading operations, but imported cargoes are lining up for concentrated discharge. As a result, actual unloading volumes this week remain small, and port inventories are unlikely to build meaningfully. Incoming imported cargoes are expected to increase in the latter half of the month, after which ports will begin accumulating inventory.
4. Bull-bear tug-of-war; participants remain cautious
Current market sentiment shows clear signs of a bull-bear tug-of-war. On one hand, recurring geopolitical tensions in the Middle East, heightened crude oil price volatility, and historically low port inventories are all sustaining bullish sentiment. Sinopec East China has raised its pure benzene contract price twice recently, for a cumulative increase of RMB 350/ton to RMB 7,700/ton, further strengthening the bullish atmosphere.
On the other hand, weak downstream profitability, declining operating rates, and lackluster end-user demand are limiting upside enthusiasm. Market participants are predominantly cautious, with spot purchases mainly limited to contract fulfillment and essential needs. Sentiment continues to swing between the "buy on rising prices" mentality and resistance to high prices.
In the near term, the hydrogenated benzene market is expected to remain in a range-bound consolidation pattern.
Crude oil: The fundamental backdrop of prolonged US-Iran confrontation remains unchanged, and the negotiation process is likely to remain tortuous. Oil price uncertainty in August is still significant. While the cost side offers some support, directional guidance remains unclear.
Supply side: Hydrogenated benzene operating rates remain at medium-to-high levels, and petroleum benzene capacity utilization and output are increasing, keeping benzene spot supply relatively ample in the northern market. Demand side: Downstream markets are showing limited follow-through, with procurement largely restricted to essential needs, offering only limited support.
In summary, amid the bull-bear tug-of-war between Middle East instability and marginally weakening pure benzene fundamentals, the hydrogenated benzene market is likely to consolidate in a range over the near term, with limited upside and downside price room. Going forward, close attention should be paid to US-Iran negotiation progress, crude oil trends, port inventory changes, and downstream procurement pace.
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