Recently, the domestic hydrogenated benzene market has been oscillating with a firm tone, with the price center shifting upward. As of late August, the negotiated price in the Shandong region was referenced at 8,050–8,150 yuan/ton, Henan at 8,050 yuan/ton, and Hebei at 8,000–8,050 yuan/ton. Sinopec East China has cumulatively raised its listed pure benzene price in recent days, now executing at 8,250 yuan/ton, which further reinforced bullish sentiment in the market and prompted hydrogenated benzene producers to follow suit with upward quote adjustments. However, at elevated price levels, the trading atmosphere has turned cautious—traders are reluctant to build large inventories, and downstream plants are purchasing strictly on a need-basis. The market has fallen into a delicate pattern of "prices can rise, but high-price sales are hard to close."
I. Upward Support Comes from Rising Crude Oil
With U.S.–Iran tensions remaining acute and geopolitical risk premiums showing no sign of fading, international crude oil has been oscillating upward within a high range, with Brent rising to around $94/barrel. As the direct feedstock for pure benzene, firm crude oil prices transmit through the naphtha–reforming–aromatics chain into pure benzene, laying a cost foundation for the entire aromatics product complex.
A more direct driver comes from the decline in pure benzene port inventories in East China. Pure benzene inventory at East China ports has dropped to extremely low levels in recent years—only around 29,000 tons—leaving very limited circulating supply. Approaching month-end, the anticipated short squeeze in the paper contract delivery period played out as expected, with holders firmly supporting prices and showing reluctance to sell, pushing spot pure benzene prices up to 8,300–8,400 yuan/ton. As a supplementary substitute for pure benzene, hydrogenated benzene has always been priced in tandem with pure benzene. Under the strong lead of pure benzene, hydrogenated benzene producers have repeatedly raised their quotes. It can be said that every increment of the current hydrogenated benzene price increase is almost entirely a passive follow-through on pure benzene, rather than the result of improved supply–demand fundamentals in its own right.
II. Most Downstream Products Suffer Profit Losses
Table: Theoretical weekly profit changes in the pure benzene chain (unit: yuan/ton)
| Product | Aug 20 | Aug 13 | Change | Change % | Next-period forecast |
|---|---|---|---|---|---|
| Pure benzene | 866 | 749 | 117 | 15.62% | 700 |
| Styrene | -558 | -397 | -161 | -40.55% | -400 |
| Phenol | -818 | -63 | -755 | -1198.41% | -800 |
| Caprolactam | -291 | -412 | 121 | 29.37% | -171 |
| Aniline | 2,959 | 3,017 | -58 | -1.92% | 3,000 |
| Adipic acid | -1,987 | -1,714 | -273 | -15.93% | -1,850 |
Source: Chempricehub
With pure benzene rising to current highs, almost all of its downstream products are operating at a loss except aniline: styrene losses have widened to -558 yuan/ton, phenol/ketone losses have reached -818 yuan/ton, caprolactam is losing around 291 yuan/ton, and adipic acid remains mired in losses. This means the price increases of pure benzene and hydrogenated benzene have not been smoothly absorbed downstream; rather, they have been continuously eroding the processing margins of downstream sectors.
Table: Capacity utilization of major downstream products
| Product | Aug 20 | Aug 13 | Change % | Next-period forecast |
|---|---|---|---|---|
| Styrene | 61.24% | 62.29% | -1.05% | 63.21% |
| Phenol | 66.99% | 69.64% | -2.65% | 73.63% |
| Caprolactam | 68.93% | 68.44% | 0.49% | 67.27% |
| Aniline | 73.73% | 73.70% | 0.03% | 75% |
| Adipic acid | 61.30% | 59.80% | 1.50% | 68.30% |
Source: Chempricehub
The direct consequence of damaged margins is that downstream operating rates have been forced down.
Styrene operating rates have already dropped to 61.24%, and phenol to 66.99%. Declining operating rates mean that rigid demand for pure benzene and hydrogenated benzene is shrinking. When losses reach a certain magnitude, downstream enterprises develop a cautious attitude toward chasing price increases, which is becoming a late-stage resistance capping further upside for hydrogenated benzene.
III. Domestic Pure Benzene Supply Expands; Hydrogenated Benzene Lacks Its Own Highlights
The supply side is quietly changing. As maintenance periods for domestic petroleum benzene plants sequentially come to an end, operating rates have rebounded month-on-month, and domestic pure benzene supply has increased. As of late August, weekly production of petroleum benzene stood at 392,000 tons, up 11,100 tons from the previous period, an increase of 2.91%, with weekly capacity utilization at 65.14%, up 1.84 percentage points from the prior period. During the period, Shenghong Refining & Chemical restarted a reforming unit and other facilities, while Lihuayi's reforming unit entered maintenance.
Previous imported cargoes have also provided a certain degree of replenishment. Despite the low inventory at East China ports, the outlook for subsequent arrivals is gradually improving. The supply–demand tightness of pure benzene itself is marginally easing, though the "lingering force" of low inventories remains and continues to support high spot prices in the short term.
Looking at hydrogenated benzene itself, its industry operating rate remains stable at around 63%. Although there has been a slight uptick, there is no concentrated restart plan for previously idled units, but neither has there been any large-scale new production cuts. Spot circulation in the market remains normal. The price spread between hydrogenated benzene and petroleum benzene remains within a reasonable range, with no notable substitution advantage emerging. In other words, hydrogenated benzene's own fundamentals lack highlights—they neither provide additional upward momentum nor form a significant drag.
IV. Long–Short Game in the East China Market at Month-End
Approaching month-end, pure benzene paper contract delivery has entered a critical phase, with holders leveraging low inventories and short-squeeze expectations to push spot prices higher. However, downstream plants are generally adopting a "buy-as-you-use" strategy, compressing raw material inventories and waiting for price pullbacks before replenishing. It is worth noting that once the short squeeze concludes, or if crude oil pulls back, the East China pure benzene market could quickly shift into stalemate or even a modest correction.
On balance, the hydrogenated benzene market is expected to oscillate at high levels with an upward bias in the short term. Upward support comes from firm crude oil, low pure benzene inventories, and residual month-end short-squeeze momentum; however, profit losses across most downstream products, increasing domestic pure benzene supply, and the fading of speculative/investment demand at high prices all act as constraints. Both upside and downside space are limited. Short-term prices are expected to rise narrowly from high levels, with the trading range likely at 8,000–8,500 yuan/ton.
For the medium-to-long-term trajectory, attention should be paid to whether the U.S.–Iran situation takes a turn, as this will directly determine the cost anchor for crude oil and pure benzene. Additionally, changes in pure benzene port inventories in East China should be monitored—once an inventory inflection point is confirmed, the short-squeeze logic will collapse. Third, whether downstream losses can be alleviated through their own product price increases or feedstock concessions bears watching; if losses continue to widen, negative demand feedback will accelerate, and hydrogenated benzene will inevitably face correction pressure at that point.
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