Before the Mid-Autumn Festival, the hydrogenated benzene market in Shandong showed a fluctuating upward trend, with mainstream transaction prices reaching 9,300–9,700 yuan/tonne.

At the beginning of the period, market sentiment weakened due to easing geopolitical tensions in the Middle East, declining international crude oil prices, and broad declines in commodity futures. Both pure benzene and hydrogenated benzene prices retreated from previous highs.

However, differences remained in Iran-US negotiations, leading to a rebound in crude oil prices. Meanwhile, tight pure benzene supply in East China, month-end delivery demand, and short-position covering pushed pure benzene spot offers higher, reaching around 10,300 yuan/tonne. Major refineries increased their listed prices by 300 yuan/tonne, widening the price gap between northern and southern markets and providing renewed support for hydrogenated benzene prices in Shandong.

Hydrogenated Benzene Profit Margins Improve Slightly, but Loss Pressure Remains

Following the price increase, profit margins for hydrogenated benzene producers recovered slightly but remained under pressure.

Based on local procurement conditions in Shandong, where crude benzene ex-factory prices remained around 8,300 yuan/tonne, hydrogenation enterprises recorded an estimated loss of approximately 70 yuan/tonne, improving by 13 yuan/tonne compared with the previous week.

When calculated using trader-delivered crude benzene prices of around 8,150 yuan/tonne, enterprises could achieve profits of approximately 150 yuan/tonne, representing a weekly increase of 463 yuan/tonne.

The large difference between the two profit calculations reflects variations in procurement channels and raw material costs among different enterprises.

The improvement in profitability was mainly driven by stronger pure benzene prices. Strong spot demand from month-end delivery requirements supported pure benzene prices, allowing hydrogenated benzene producers to increase selling prices.

However, falling oil prices, weaker xylene prices, and declining heavy benzene prices limited further margin expansion. Lower industrial naphthalene prices also weighed on by-product returns.

Although crude benzene costs declined slightly while pure benzene prices strengthened, hydrogenated benzene producers have only achieved a limited recovery in profitability. Ahead of the holiday period, some producers reduced operating rates and controlled inventory levels, resulting in weaker trader purchasing activity and additional pressure on crude benzene prices.

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Operating Rates Decline as Shutdowns Outweigh Restarts

Supply contraction became more evident as production reductions and shutdowns exceeded new restarts.

During the week:

• One production unit restarted;
• Four units reduced operating rates;
• Two units shut down.

Domestic hydrogenated benzene output decreased to approximately 74,600 tonnes, down 4,200 tonnes from the previous period. The operating rate declined by 3.18 percentage points to 56.24%.

Changes included:

• A coking-linked unit in Shanxi resumed operation;
• Shandong Wanshan, Henan Shouchuang, and Puyang Shengyuan reduced operating loads;
• Inner Mongolia Qinghua suspended production;
• Ningxia Tongde Aixin halted one production line.

With capacity reductions exceeding restarts, the domestic operating rate of hydrogenated benzene continued to decline.

Looking ahead, several production changes may further influence supply:

• Jinyuan Phase II, Panjin Ruide, and Puyang Zhonghui are expected to shut down;
• Laigang may implement production restrictions;
• Angang plans to restart operations.

As a result, domestic operating rates are expected to fall further to around 53% in the short term.

After the National Day holiday, Ningxia Baofeng is expected to undergo a shutdown, while Hebei Ruixin Jinhua and Hebei Rongte may restart. Operating rates are projected to recover slightly to 54–55%.

Overall, reduced supply is currently providing support for hydrogenated benzene prices, although market participants will continue monitoring whether production recovery occurs after the holiday.

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Other Key Market Indicators

Pure Benzene Inventory Rises Slightly, but Supply Remains Tight

Before the Mid-Autumn Festival, pure benzene port inventories increased to approximately 44,000 tonnes, up 6,000 tonnes from the previous period.

Inventories are expected to rise further to around 60,000 tonnes next week, mainly because holiday closures in East China reduced pickup volumes while incoming shipments continued.

Although inventory accumulation has eased short-term supply pressure, overall inventory levels remain relatively low. Therefore, the increase is unlikely to create significant downward pressure on pure benzene or hydrogenated benzene prices in the near term.

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Downstream Profit Pressure Increases, but Operating Rates Continue to Improve

Higher prices for pure benzene and hydrogenated benzene have increased raw material costs for downstream industries. However, many downstream sectors have struggled to fully transfer these costs to end users, resulting in widening profit losses.

Despite margin pressure, operating rates in several downstream sectors have improved.

Key developments include:

Styrene

Shell plans to restart its styrene production unit, which may increase demand for pure benzene.

Phenol/Acetone

Wanhua Chemical plans to restart its phenol/acetone unit, while Zhejiang Petrochemical is scheduled to conduct maintenance on one of its 650,000 tonnes/year phenol/acetone units in October.

Caprolactam

Yangmei Taihua plans to restart production, supporting additional benzene demand.

Aniline

Wanhua’s Phase III aniline unit is reportedly restarting. Meanwhile, Tianji plans a shutdown on October 10, Jinling has scheduled maintenance for its 200,000 tonnes/year unit, and Sinopec Nanhua Zhangzhou plans to start its 300,000 tonnes/year unit in early October.

Adipic Acid

Chongqing Huafeng plans to restart its Phase III production unit.

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Market Outlook

The hydrogenated benzene market is currently supported by:

• Tight pure benzene supply;
• Lower hydrogenated benzene operating rates;
• Reduced production capacity;
• Strong spot benzene prices.

However, profitability remains under pressure due to weak downstream margins and unstable by-product economics.

In the short term, supply contraction may continue supporting hydrogenated benzene prices, while future price movements will depend on post-holiday production recovery, downstream demand improvement, and changes in pure benzene inventories.