Post-Price Increase of Hydrogenated Benzene: Changes in Data Across Various Dimensions

Lead-in: Before the Mid-Autumn Festival, the Shandong hydrogenated benzene market fluctuated at a high level with an upward trend, with mainstream transaction prices ranging from 9,300 to 9,700 yuan/ton. Affected by the easing of Middle East tensions, declining international crude oil prices, and a broad drop in commodity futures, market sentiment weakened, causing spot prices for pure benzene and hydrogenated benzene to retreat from their highs. However, significant disagreements persist in Iran-US peace talks, leading to a resurgence in oil prices. Combined with tight pure benzene supply in East China, month-end delivery obligations, and short-covering restocking, East China pure benzene offers surged to 10,300 yuan/ton. Major refineries raised their posted prices by 300 yuan/ton, widening the north-south price gap and driving Shandong hydrogenated benzene prices higher once again. With the rise in hydrogenated benzene prices, how have profits and operating rates changed?

1. Hydrogenated Benzene Profits Recovered Slightly, but Loss Pressure Remains

Before the Mid-Autumn Festival, profits for hydrogenation enterprises recovered slightly but remained in a loss position. Calculated based on Shandong regional self-procurement prices, the ex-factory price of Shandong crude benzene was 8,300 yuan/ton, unchanged from the previous week. Based on a self-procurement price of 8,370 yuan/ton, the profit for hydrogenation enterprises was -70 yuan/ton, an increase of 13 yuan/ton compared to last week. When calculated comprehensively using the trader delivered price of 8,150 yuan/ton, enterprise profits were 150 yuan/ton, an increase of 463 yuan/ton compared to last week. The significant difference in profits under different calculation methods reflects substantial variations in procurement channels and raw material costs among enterprises.

The recovery in profits was primarily driven by firm pure benzene spot prices. Supported by month-end deliveries, pure benzene spot performance remained strong, facilitating high-price sales of hydrogenated benzene. However, this week saw a notable decline in oil prices, leading to a pullback in xylene prices. Heavy benzene prices dropped significantly due to the sharp fall in industrial naphthalene, dragging down overall profits via by-products. Despite stable-to-declining raw material crude benzene prices and rising pure benzene prices, profits for hydrogenation enterprises did not improve significantly, showing only slight recovery. As the double holiday approached, some enterprises reduced operating rates and inventory stockpiles. This week, enterprises reduced purchases from traders, exerting downward pressure on crude benzene prices.

2. More Capacity Shut Down Than Restarted, Leading to Lower Operating Rates

During the week, one unit restarted, four units reduced loads, and two units shut down, resulting in declines in domestic hydrogenated benzene operating rates and production. Before the Mid-Autumn Festival, weekly hydrogenated benzene production was 74,600 tons, a decrease of 4,200 tons from the previous period; the operating rate was 56.24%, down 3.18 percentage points from the previous period. Specifically, the Shanxi Coking Plant unit restarted; units at Shandong Wanshan, Henan Shouchuang, and Puyang Shengyuan reduced loads; the Inner Mongolia Qinghua unit shut down, and Ningxia Tongde Aixin halted one line. Since capacity reductions and shutdowns exceeded restarts, the domestic hydrogenation operating rate declined this week.

At the end of the month, Jinyuan Phase II, Panjin Ruide, and Puyang Zhonghui plan to shut down; Lai Steel may limit production; Ansteel plans to restart. Capacity reductions and shutdowns are still expected to exceed restarts, so the domestic hydrogenation operating rate is projected to continue falling to around 53%. After the National Day holiday, Ningxia Baofeng plans to shut down, while Hebei Ruixin Jinhe and Hebei Rongte units plan to restart. The domestic hydrogenation operating rate is expected to rise to 54-55%. Overall, short-term supply contraction supports hydrogenated benzene prices, but whether operating rates will recover as expected after the holidays remains to be tracked.

Besides changes in hydrogenated benzene data, how did other indicators perform?

1. Pure Benzene Port Inventories Rose Slightly, Expected to Increase Further Next Week

Before the Mid-Autumn Festival, pure benzene port inventories stood at 44,000 tons, an increase of 6,000 tons from the previous period. Inventories are expected to rise to 60,000 tons next week, mainly because the Mid-Autumn holiday caused market closures in East China, with pickup volumes falling short of arrival volumes. The inventory accumulation has somewhat alleviated the tight supply situation of pure benzene in East China, but absolute levels remain low, currently not exerting obvious pressure on pure benzene and hydrogenated benzene prices.

2. Some Pure Benzene Downstream Profits Deepened Losses, but Operating Rates Improved

Table: Weekly Theoretical Profit Changes in the Pure Benzene Industry Chain (Unit: Yuan/Ton)

Data Source: Chempricehub Information

As domestic pure benzene and hydrogenated benzene prices continued to climb, some downstream sectors lacked momentum to pass on cost increases, leading to wider losses in certain areas.

However, except for styrene, capacity utilization rates for other pure benzene downstream products such as caprolactam, aniline, and phenol all increased. Furthermore, capacity utilization rates for all major pure benzene downstream products are expected to rise next week, indicating an overall increase in pure benzene demand expectations. Specific developments include:
① Styrene: Shell's styrene unit has a restart plan.
② Phenol/Acetone: Wanhua Chemical's phenol/acetone unit has a restart plan; Zhejiang Petrochemical has a maintenance plan for one 650,000 ton/year phenol/acetone unit in October, expected to last more than half a month.
③ Caprolactam: Yangmei Taihua plans to restart.
④ Aniline: Reports indicate Wanhua Phase III is restarting; Tianji plans to shut down on October 10; Jinling's 200,000-ton unit has a maintenance plan for September 28; Sinopec Nanhua Zhangzhou's 300,000 ton/year unit is planned to start production in early October.
⑤ Adipic Acid: Chongqing Huafeng Phase III plans to restart.