Introduction: The Shandong hydrogenated benzene market recently experienced a rollercoaster-like trend, with mainstream transaction prices fluctuating between 7,400 and 8,300 RMB/ton. The intra-week volatility increased significantly. The core driver was the sharp decline in crude oil prices, which heavily impacted aromatic futures. Both styrene and pure benzene futures fell sharply, pulling down pure benzene spot prices rapidly, leading to a substantial drop in hydrogenated benzene prices. However, after crude benzene costs also declined significantly, the profit margins for benzene hydrogenation enterprises actually improved. Meanwhile, severe air pollution alerts in Shandong and Hebei provinces led to reduced or halted operations at multiple hydrogenated benzene units, causing a decrease in operating rates.
Last weekend, a rebound in crude oil prices helped stabilize both futures and spot prices of pure benzene. Some traders took advantage of lower prices to procure materials, revitalizing inquiry activities. Additionally, increased demand in the Shandong region provided support for hydrogenated benzene, prompting factories to slightly raise their quoted prices. The market briefly showed signs of stabilization.
Early this week, however, crude oil prices continued to fall. Pure benzene futures hit their daily limit down once, spreading bearish sentiment rapidly across the domestic market. Spot prices for both pure benzene and hydrogenated benzene plunged. Driven by panic selling, some traders offloaded inventory, while downstream buyers with rigid demand secured goods at notably low prices. Affected by this sentiment, some hydrogenated benzene producers proactively lowered prices to facilitate sales, pushing negotiated prices further down during the week. By Thursday, transaction prices for hydrogenated benzene had dropped to 7,600–7,700 RMB/ton.
After Thursday, crude oil prices rebounded. News emerged regarding production cuts at a styrene unit, leading to increased positions and an upward movement in futures markets. This drove a recovery in both pure benzene futures and spot prices. Hydrogenated benzene producers became reluctant to sell at low prices and began testing higher quotes, helping to restore market sentiment. While the downtrend has been arrested, whether prices can sustain these levels depends on next week’s developments.
Signal 1: Operating Rates Declined, but Expected to Recover Next Week
This week, the operating rate for hydrogenated benzene stood at 56.90%, down 1.78 percentage points from the previous week. Weekly output totaled 75,500 tons, a decrease of 2,300 tons. Units that reduced or halted production include Tangshan Ruida (maintenance shutdown), Hebei Ruixin Jinhua (environmental alert shutdown), Henan Jinyuan Phase II (shutdown) and Phase I (load reduced to 70%), as well as Wanshan, Zaozhuang Zhenxing, Huineng, Chenyao, and Hengxin (all under production restrictions). On the other hand, Ningxia Baofeng and Hebei Jiantao restarted operations. Shandong Laigang resumed production but is facing a 30% output restriction due to severe air pollution alerts.
However, next week sees planned restarts for Ningxia Tongde Aixin, Puyang Zhonghui, Hebei Ruixin Jinhua, and Tangshan Ruida. If environmental restrictions are lifted, the operating rate is expected to rise above 63%. This increase in supply represents the first major hurdle to any potential rebound next week.
Signal 2: Profit Margins Improved, but Driven by Raw Material Cost Reductions
This week, the ex-factory price of crude benzene in Shandong was 6,200 RMB/ton, down 1,100 RMB/ton from the previous week—a decline larger than that of the final product. Calculating based on a self-procurement cost of 6,270 RMB/ton, benzene hydrogenation enterprises saw profits of 330 RMB/ton, an increase of 283 RMB/ton week-on-week. Based on trader delivered prices of 6,300 RMB/ton, profits were 300 RMB/ton, up 83 RMB/ton.
The essence of this margin improvement is that crude benzene prices fell more sharply than hydrogenated benzene, effectively compressing costs rather than reflecting demand-driven strength. Downstream pressure on crude benzene prices persists. If crude benzene prices stop falling, profit margins will likely narrow again. Producers should be aware of this dynamic.
Signal 3: Sinopec Reduced Listed Prices by 900 RMB to 7,900 RMB/ton
Major suppliers adjusted their listed prices downward in line with the rapid decline in East China spot prices. This indicates that the current downturn is systemic and affects the entire supply chain, not just isolated segments. The listed price of 7,900 RMB/ton provides a reference anchor for the hydrogenated benzene market.
Factors supporting a rebound include: market reaction to styrene production cuts, increased trading positions and rising futures prices, stabilization and recovery in pure benzene futures and spot markets, low port inventories providing floor support, and restocking by downstream sectors following margin improvements.
Factors suppressing the rebound include: expectations of declining international oil prices, increased supply from restarting hydrogenated benzene units, narrowing profit margins if crude benzene prices stabilize, and lingering cautious sentiment despite eased panic.
Overall Judgment: Next week, hydrogenated benzene prices are likely to experience a narrow rebound following the recent sharp decline, with mainstream transactions expected in the range of 7,600–8,200 RMB/ton. The drivers behind this rebound are sentiment repair and support from low inventories, rather than a fundamental trend reversal. Upside potential is constrained by increasing supply and weak oil prices, while downside risk is limited by low inventories and rigid demand. For hydrogenated benzene producers, the window for margin recovery is short. It is recommended to manage shipment schedules rationally and seize opportunities to lock in profits during the rebound. At the same time, closely monitor crude benzene prices; if raw material costs begin to rise, pricing strategies must be adjusted promptly. Key variables to watch include unexpected drops in crude oil prices, changes in environmental restriction policies, and whether announced styrene production cuts are implemented. Any change in these three factors would require re-evaluating next week’s price range. While this week’s decline was steep, the intensity of next week’s rebound remains uncertain. Low inventories provide a floor, increased supply sets a ceiling, and the space between them will be determined by market forces.
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