Leading companies have raised spot prices 7 times this month. Can pure benzene prices continue to surge?

As January begins, the chemical market ushers in a major start to the year—pure benzene prices strongly rebound from the bottom, with futures and spot prices moving upward in sync, showcasing a “continuous rise” performance. The frequency and magnitude of price adjustments have reached new highs in recent market activity.

As an industry barometer, Sinopec’s price adjustment actions attract the most attention. According to industry sources, from January 12 to January 30, Sinopec raised its listed price for pure benzene seven times, with increases of 100 yuan/ton, 100 yuan/ton, 100 yuan/ton, 150 yuan/ton, 150 yuan/ton, 100 yuan/ton, and 150 yuan/ton respectively, totaling an increase of 850 yuan/ton.

In response, Li Wei, a pure benzene analyst at Zhuochuang Information, stated that as of January 30, Sinopec’s listed price for pure benzene had been raised to 6,150 yuan/ton, a total increase of 16.04%. As of the close on January 30, the main futures contract for pure benzene was quoted at 6,237 yuan/ton, remaining in a high range, with a peak reaching a stage high of 6,434 yuan/ton.

Why did pure benzene prices experience a “explosive” rise in January?

Feng Xiaofen, a futures analyst at Founder Mid-term Futures, explained that the direct drivers of this round of price increases are, firstly, the strong upward movement of styrene, which is linked to the industry chain, and secondly, the rebound in oil prices at the cost end. “As styrene prices rise, pure benzene, as an upstream raw material, naturally follows suit. Meanwhile, geopolitical tensions have caused international crude oil prices to oscillate upward, coupled with the simultaneous rise in naphtha prices. Pure benzene, as a reformate and pyrolysis by-product, faces rigid cost increases, further boosting bullish sentiment and pushing prices higher,” she said.

Li Wei believes that in January, the increase in styrene exports was significant, combined with multiple plant faults and inventory levels not rising as expected, which drove up the styrene market and subsequently lifted pure benzene prices. Later, geopolitical tensions became a core positive factor, with crude oil prices oscillating upward, continuously strengthening the cost support for pure benzene. Additionally, the short covering at the end of the month, along with traders’ low-price reluctance to sell, further propelled the market higher.

Li Wei further explained that, at the same time, under the expectation of price increases, downstream factories began to replenish their inventories before the Spring Festival, especially in the styrene industry. The widening price gap between pure benzene and styrene led to large-scale purchases of pure benzene to lock in processing profits. Traders also actively followed suit, with trading activity surging and amplifying the pure benzene price rally.

During an interview, Futures Daily reporters learned that the continuous rise in pure benzene prices has not benefited the entire industry chain equally. Instead, a clear differentiation has emerged—downstream varieties with different fundamentals face very different development situations.

Feng Xiaofen explained that better fundamentals in styrene and aniline, due to tight supply and demand balance, have seen their prices increase more than pure benzene, with plant cash flows significantly improving in January and less affected by price hikes. Styrene currently shows excellent profit margins, and even with rising pure benzene prices, the impact on it remains limited.

Conversely, downstream varieties with weaker fundamentals are under greater pressure. Feng Xiaofen noted that products like caprolactam and phenol, although passively following the cost-driven price increases, are hampered by weak terminal demand, leading to poor price transmission and industry profit compression. The 3S industry (ABS, PS, EPS) downstream of styrene, due to the off-season for terminal demand, has limited price transmission and similar profit squeeze.

Jianlin Tang, a futures analyst at Zijin Tianfeng, further pointed out that for downstream sectors already operating at a loss (such as caprolactam), the continued rise in pure benzene prices could further suppress their operating rates or even cause declines, worsening industry difficulties.

“From the perspective of terminal demand, the capacity to absorb price increases varies across different fields,” Li Wei said. Small niche products like coatings and solvents, which have a high proportion of pure benzene in their costs, see larger price increases and weaker bargaining power among terminal customers, leading to relatively smooth cost transmission. In contrast, mainstream terminal sectors such as textiles, home appliances, and automobiles have yet to see a clear demand recovery. Downstream factories are increasingly resistant to high-priced pure benzene, shifting procurement strategies from “active stockpiling” to “just-in-time purchasing,” with some factories even reducing plant loads to avoid risks from high raw material prices. Meanwhile, market sentiment is divided: upstream refineries are optimistic and reluctant to sell, midstream traders hoard goods expecting higher prices, and downstream factories remain cautious. This divergence further amplifies price volatility.

Will this wave of pure benzene price increases continue? The interviewed analysts are all cautious, generally believing that short-term upside is limited, with risks of correction, and that long-term focus should be on downstream resumption of work and supply-demand changes.

Feng Xiaofen believes that as the Spring Festival approaches, terminal demand enters its traditional seasonal lull, which will negatively feedback on the upstream industry chain and drag down pure benzene prices. In fact, this round of price increases is mainly driven by undervaluation, cost factors, and styrene movement, with no significant improvement in pure benzene supply and demand. Currently, port inventories remain high, and further price increases are limited. A cooling of market sentiment could lead to price adjustments. Post-holiday, attention should be paid to downstream and terminal resumption and stocking conditions. Once the chemical industry enters maintenance season, pure benzene may see a structural market.

Tang Jianlin focuses on styrene demand as a key variable. He believes whether the trend can continue depends on the recovery of terminal styrene demand after the holiday: if demand improves, boosting the 3S industry’s styrene needs, then pure benzene prices may continue to rise; otherwise, prices are likely to fall.

Li Wei thinks that the current colder weather and insufficient downstream orders still suppress the market. However, pre-holiday replenishment and expectations of adverse weather in Europe and the US could lead to a slight increase in pure benzene prices in February. Still, the issues of weak terminal consumption and sluggish orders remain unresolved, which constrain market sentiment. If post-holiday resumption falls short of expectations, pure benzene prices are likely to retreat from high levels.

(Source: Futures Daily)