Introduction: In March, the pure benzene market experienced a sequential transmission of impacts from news, cost, and supply factors on prices. After initial sharp rises and falls, market sentiment turned cautious due to the volatile and artificially influenced Middle East situation, leading to significantly narrower fluctuations in the latter half of the month. However, as the anticipated declines in production and imports for April–May are gradually confirmed, favorable supply-side factors continue to provide a floor for prices.

I. Rising Prices Across the Pure Benzene Industry Chain

In March, spot prices for pure benzene at East China ports surged significantly, with negotiations ranging from 6,220 to 11,200 yuan/ton. At the beginning of the month, high inventory levels at East China ports led to a predominantly narrow consolidation in the market. Subsequently, geopolitical tensions in the Middle East drove a sharp increase in crude oil prices, pulling pure benzene prices upward. Supply-side enterprises, concerned about future raw material security, implemented defensive production cuts, raising market worries about a significant drop in future circulation. Buying interest in the East China port market was strong, while sellers held back offers, leading to active inquiries and chasing of higher prices, resulting in consecutive price increases. As the Middle East tensions persisted into the latter part of the month and contract restocking gradually concluded, signals of easing tensions in Iran emerged, alleviating industry concerns. Coupled with the impact of low-priced supplies from northern regions entering the market, sellers holding long positions took profits, driving a phased correction in East China spot prices. Currently, the market is in a stalemate between bullish and bearish forces: positive support stems from expectations of tightening domestic supply, a significant decline in import arrivals, stable rigid demand from downstream sectors, and ongoing destocking at East China ports. Bearish pressure arises from the substantial cumulative price increase in March, with industry participants showing resistance to the high absolute price level of pure benzene. Amid this tug-of-war, the overall market trend remains strong, fluctuating at elevated levels.

From the perspective of price differentials across the industry chain, caprolactam once widened the benzene-caprolactam spread from 4,000 yuan/ton to 5,000 yuan/ton. The price difference between adipic acid and pure benzene remained around 2,000 yuan/ton. The phenol-pure benzene spread widened from 700 yuan/ton to 1,200 yuan/ton before retreating to 1,000 yuan/ton. The aniline-pure benzene spread narrowed from 3,000 yuan/ton to 2,000 yuan/ton, briefly rising to 4,000 yuan/ton before returning to 3,000 yuan/ton. The styrene-pure benzene spread increased from 1,500 yuan/ton to 2,000 yuan/ton.

Overall, the rapid rise in pure benzene prices during this period was actively followed by downstream products. The widening spreads between downstream products and pure benzene within the cycle demonstrated a positive response to the price increases.

II. Strengthening Downstream Profits and Declining Capacity Utilization

As downstream-pure benzene spreads generally widened during the cycle, downstream profits for pure benzene also saw broad improvement. The weighted average profit for pure benzene downstream once reached its highest level in a year. In terms of capacity utilization, the cycle showed an initial decline followed by an increase, with an overall upward trend. Due to generally favorable profitability across downstream sectors, the decline in downstream capacity utilization during this cycle did not stem from negative feedback from end-users but rather from planned maintenance, operational issues, or raw material supply-induced production cuts. Overall, the market continues to trade on macro/cost-driven price increases, with insufficient price resistance from end-users.

III. Increased Certainty of Supply-Side Reduction

During the cycle, due to restricted maritime transport, several refineries, concerned about future crude oil supply security, implemented defensive production cuts. Given that refinery reductions in March have become a reality and sentiment for April is more conservative, the market has generally formed ample expectations for current and future production cuts in pure benzene. It is estimated that domestic pure benzene production from March to May may decrease by 40,000–120,000 tons per month or more compared to initial forecasts. Additionally, reduced imports resulting from cracker production cuts in South Korea and Southeast Asia have also been factored into market pricing, with import reductions of 50,000–150,000 tons per month expected for April–May.

The impact of the Middle East geopolitical situation during this cycle has solidified supply reductions from the raw material end, while negative feedback from downstream sectors has yet to materialize. This has shifted the phased supply-demand balance for pure benzene toward a temporary shortage, driving a strong upward movement in market prices.

IV. Confirmed Supply Reduction Supports Future Prices

Amid ongoing macro influences and increased certainty of supply reductions, the market faces a shortage of low-priced supply sources. Theoretically, fundamental destocking will continue from April to May, with monthly supply-demand gaps fluctuating around -200,000 tons. From a fundamental perspective, prices are more likely to rise. However, as the Middle East situation enters a critical phase, market participants are concerned about a potential unilateral U.S. withdrawal, leading to significantly heightened caution compared to earlier periods. The market is expected to remain strong with fluctuations from April to May, with prices potentially ranging between 8,200 and 9,500 yuan/ton. Attention should be paid to price transmission from downstream to end-users and developments in the Middle East situation.