China Benzene Industry Chain – Weekly Market Outlook (May 19–25)

The crude benzene market is expected to remain firm at elevated levels in the short term, supported by the current market dynamics. Downward price corrections are likely to be limited.

Following a prolonged period of market weakness, sentiment has significantly improved amid the recent easing of China - U.S. trade tensions. The recovery in commodity futures has bolstered the pure benzene market, lifting the price floor and narrowing the downside potential. However, with prices now elevated after a series of upward adjustments, appetite for chasing further gains has diminished. In the near term, pure benzene is likely to consolidate within a range as the market digests recent increases.

Hydrogenated benzene is anticipated to trade in a high-level consolidation pattern this week. With profitability across the downstream chain remaining weak, market resistance to high prices is evident. There are expectations of higher operating rates for hydrogenated benzene units, but this is likely to coincide with a phase of price consolidation. Market participants should closely monitor downstream plant operations and movements in crude oil and international benzene markets.

In the short to medium term, styrene will continue to benefit from reduced output due to maintenance at key production units, keeping operating rates at moderate to low levels and maintaining a tight supply-demand balance. Additionally, commercial inventories remain generally low, providing firm support for market stability. However, gains in the main styrene futures contract have been capped amid contract rollovers, and the relatively weak support from feedstock benzene - along with the wide benzene-styrene price spread - has prompted some profit-taking. Heightened resistance from downstream buyers to elevated feedstock prices has also weighed on market sentiment. As a result, while the recent uptrend may pause for consolidation, any pullbacks are expected to be modest.

The phenol market in China is expected to show a slightly weaker bias this week. Downstream demand remains subdued, with growing resistance to high-priced feedstocks dampening overall sentiment. Upstream support from pure benzene is limited, and some sellers have become more active in offloading cargoes at higher prices. As the market works to absorb recent gains, there remains downside risk in phenol prices. Ongoing attention should be paid to feedstock trends, supply-demand dynamics, and procurement behavior at both the terminal and downstream levels.

The recent improvement in China - U.S. relations and the rebound in crude oil prices have provided strong support for pure benzene, thereby boosting the cost base for aniline. Despite being priced below cost, aniline inventories have been effectively reduced after restocking activity from downstream buyers looking to bottom-fish. With major producers seeing lower inventories and some MDI units scheduled for maintenance this week - leading to slightly reduced demand - the cost support remains intact. Considering the current loss-making situation and tightened supply, the aniline market is expected to show upward momentum this week.

Pure benzene is likely to consolidate within a range as the market absorbs recent gains, resulting in softer cost support for caprolactam. No significant changes are expected in supply, as plant operations remain stable. On the demand side, downstream players remain cautious, limiting purchases to just-in-time orders. Against this backdrop, the caprolactam market is likely to extend its recent sideways trend, and market participants are advised to adopt a prudent approach.

The adipic acid market in China is expected to remain in a wait-and-see mode this week, with a risk of price pullbacks if no strong bullish factors emerge. On the supply side, plant operations remain stable, with some producers continuing to accumulate inventory, resulting in ample spot availability. Downstream buyers are cautious in chasing higher prices, and demand remains sluggish, with limited restocking activity. While improved market sentiment - driven by easing geopolitical tensions and a stronger performance in commodity futures - has helped lift the price floor for benzene, this has not translated into consistent upward momentum. With the market locked in a tug-of-war between bullish and bearish factors, most participants are adopting a cautious, need-based procurement strategy amid an atmosphere of uncertainty.