China’s hydrogenated benzene market continues to receive strong support from tight supply conditions, low pure benzene inventories, and rising crude oil costs. In the short term, prices are expected to remain at elevated levels as supply recovery remains limited.

Geopolitical Risks Continue to Support Benzene Market

Recently, renewed tensions in the Middle East have brought additional uncertainty to global energy markets. Rising geopolitical risks have pushed crude oil prices higher, providing further cost support for China’s pure benzene and hydrogenated benzene markets.

In Shandong, hydrogenated benzene prices closed at around RMB 10,450/tonne on October 10, while pure benzene prices reached RMB 10,450–10,500/tonne on October 11.

Although crude oil futures movements have shown some differences from actual physical market conditions, geopolitical risks continue to influence market expectations. The uncertainty surrounding energy supply has strengthened the cost support for benzene-related products.

Low Pure Benzene Inventories Support Market Strength

One of the key factors driving the current benzene market is the extremely low inventory level at East China ports.

As of October 8, commercial inventories of pure benzene at Jiangsu ports dropped to approximately 53,000 tonnes, reaching the lowest level recorded this year.

Limited port availability, restricted import arrivals, and tight market liquidity have created strong price support. At the beginning of October, pure benzene and styrene futures both showed strong upward momentum, boosting confidence in the spot market.

Meanwhile, the ex-works price of hydrogenated benzene in Shandong increased to around RMB 10,400/tonne, while Sinopec’s listed pure benzene price in East China reached RMB 10,600/tonne.

With no significant increase expected in port inventories in the short term, the supply-demand balance is likely to remain tight, providing continued support for benzene prices.

Hydrogenated Benzene Supply Remains Limited Despite Improved Profitability

The profitability of hydrogenated benzene producers has improved recently. In Shandong, profit margins recovered to approximately RMB 500/tonne, mainly due to rising hydrogenated benzene prices and relatively stable crude benzene costs.

However, higher profits have not immediately resulted in increased production.

The operating rate of hydrogenated benzene units declined slightly to 55.03%, as some production facilities remain under maintenance or continue operating at reduced capacity.

Several factors have limited production recovery:

• Some plants remain offline or have not fully resumed operations;
• Producers remain cautious about market conditions despite improved margins;
• The price increase of crude benzene has lagged behind hydrogenated benzene, creating uncertainty regarding future profitability.

Although the price spread between crude benzene and hydrogenated benzene has widened, supporting current producer margins, a future increase in crude benzene prices could narrow the spread and pressure profitability again.

Downstream Demand Remains Stable but Procurement Stays Cautious

On the demand side, operating rates among major downstream industries have generally improved compared with the previous period.

The styrene sector saw slight increases in operating rates as several units raised production. Phenol producers also increased operating loads, while caprolactam producers including Hualu Hengsheng and Shenma improved production levels.

In the aniline sector, Sinopec Nanhua Zhangzhou’s new capacity is expected to contribute additional supply after its planned start-up.

However, high raw material prices continue to affect downstream profitability. Many buyers remain cautious and focus mainly on essential procurement rather than large inventory replenishment.

Market Outlook: Hydrogenated Benzene Prices Expected to Stay Firm

Looking ahead, the hydrogenated benzene market is expected to remain supported by several factors:

Cost Support:
Continued geopolitical uncertainty may keep international crude oil prices elevated, supporting the cost of pure benzene and related products.

Supply Constraints:
Low hydrogenated benzene operating rates, limited production recovery, and historically low pure benzene inventories will continue restricting market supply.

Demand Conditions:
Although some downstream sectors face profit pressure, essential demand remains stable, preventing a significant decline in market consumption.

Overall, hydrogenated benzene prices are expected to remain strong in the short term. While improved producer margins may encourage some production recovery, the release of additional supply will require time.

The market will continue to focus on changes in crude oil prices, port inventories, production recovery, and downstream purchasing activity.