SunSirs: July Observation on Global Benzene Market Operation

After experiencing a sharp correction in mid-to-late June, the global Benzene market showed signs of stopping the decline and stabilizing in early July, with the regional price centers rebounding slightly from their lows or seeing a marked slowdown in their downward trends. This stabilization did not stem from a fundamental improvement in the underlying fundamentals but was a phased rebound driven by the resonance of multiple marginal factors.

Specifically, after entering July, international crude oil prices found short-term support near 70 US dollars per barrel. China's downstream sector saw a slight release of restocking demand at low prices, coupled with a slowdown in the rhythm of inter-regional trade circulation due to the impact of typhoon weather. These three factors together pushed the Benzene market to stop falling and stabilize. However, all the above changes are only marginal and phasic improvements, which have not yet touched the fundamental shift in the supply-demand pattern, and the rise in Benzene prices lacks the continuous support of fundamental factors.

The production capacity structure determines the long-term contradictions:

East Rises, West Stabilizes, and Surplus Pressure Persists

From the perspective of global production capacity distribution, the pattern of "rising in the east and stable in the west, with Asia dominating" in the Benzene market has basically taken shape. As of the end of 2025, the global total Benzene production capacity was approximately 85.18 million tons per year, with a highly concentrated regional distribution. China's production capacity stood at 27.716 million tons per year, firmly ranking first in the world, accounting for nearly one-third of the global total. Moreover, China has made prominent incremental contributions in recent years, serving as the core engine for global production capacity growth. In the next three to five years, a large number of reforming, disproportionation and catalytic cracking projects will be put into operation successively, making the expansion of supply highly certain. As a trade hub, South Korea, relying on the flexibility of the toluene disproportionation process, has its plant start-ups and shutdowns directly determining regional price spreads and arbitrage rhythms. The United States mainly adopts catalytic reforming, and its prices are deeply bound to the demand for gasoline blending, with obvious seasonal fluctuations. Europe is dominated by ethylene cracking units, whose operation is restricted by the comprehensive profits of olefins, making them mostly passive adjusters.

The above production capacity structure has given rise to the core contradiction of the global Benzene market: the global supply elasticity is concentrated in Asia, and whether the excess supply in Asia can be effectively消化 depends heavily on two paths – first, whether the arbitrage window between the US and Asia is opened; second, whether the downstream demand in China can continue to be sustained.

Each region has its own operating logic, and the linkage mechanism has weakened

The current global Benzene market has formed four pricing anchors with China as the production and consumption core, South Korea as the trade hub, the United States as the benchmark for oil blending pricing, and Europe as the marginal variable. Since July, the trends of various regions have diverged significantly, and each region has conducted independent pricing based on the fundamentals of supply and demand.

In terms of China, the current market is characterized by marginal tightening of supply, stable demand and continuous inventory destocking. On the supply side, import volume remains at a low level. Coupled with the output reduction caused by maintenance of some domestic plants, the inventory in East China ports has declined for consecutive weeks, making the market available supply sources increasingly tight. On the demand side, the overall operating rate of downstream sectors is stable, and the rigid demand procurement remains steady without obvious contraction. A marginal change worth noting is that as an important supplementary source of benzene in Asia, the navigation volume in the Strait of Hormuz has rebounded recently, which means the expectation of overseas cargo arrivals will increase marginally. However, the substantial recovery of supply still takes time to transmit and cannot make up for the existing supply gap in the short term. Overall, the destocking trend of benzene is expected to continue in the short term, and the price has a relatively solid bottom support. However, the medium-term risk lies in that most downstream varieties are already near the break-even line. If the terminal demand fails to warm up further, the profit deterioration may force downstream enterprises to conduct centralized maintenance, and the supply-demand pattern will reverse rapidly at that time.

For South Korea, as a global hub for Benzene trade, the core of supply changes lies in the operating rate of toluene disproportionation units. Although the current disproportionation profit is still in the loss range, the previously overhauled units have resumed operation one after another, driving a slight marginal increase in supply. However, affected by the recent typhoon weather disturbance, the shipping schedule from South Korea to China has slowed down, and the arrival volume of imported goods has been relatively limited, so the export pressure to China has not yet shown significantly. In the United States, the logic of aromatic hydrocarbon blending has supported a phased weakening, and there is insufficient upward momentum for local Benzene prices. In Europe, temporary supply shocks such as unit shutdowns have pushed up prices, but the strong performance lacks support from the demand side. In the future, as units resume operation, supply will gradually return, and the sustainability of the price increase is questionable. Currently, the price gap between Asia and Europe has not yet reached the arbitrage threshold.

Volatility and Bottom-Building Remain the Main Tone

Overall, the current global Benzene market is in a pattern where phased recovery coexists with medium-term pressure. The halt of price decline and stabilization this round is the result of the resonance of three marginal positive factors: the bottom support of crude oil costs, restocking by China's downstream sector, and the slowdown in regional trade circulation caused by weather disruptions. However, all these factors are short-term adjustments and have not yet touched the fundamental shift in the supply and demand structure.

In the long run, the production capacity pattern of "rising in the East and stabilizing in the West" determines that the global Benzene market still faces oversupply pressure. The mismatch between the continuous release of new production capacity in Asia and the terminal demand absorption capacity remains the deepest contradiction in the market. Benzene prices are likely to continue their low volatility trend.

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