1、 Analysis of the market trend of pure benzene

Recently, the pure benzene market has achieved two consecutive increases on weekdays, with petrochemical companies in East China continuously adjusting prices, with a cumulative increase of 350 yuan/ton to 8850 yuan/ton. Despite a slight increase in inventory at East China ports to 54000 tons in February 2024, the price of pure benzene remains strong. What is the driving force behind this?

Firstly, we noticed that downstream products of pure benzene, except for caprolactam and aniline, suffered comprehensive losses. However, due to the slow follow-up of pure benzene prices, the profitability of downstream products in Shandong region is relatively good. This shows market differences and response strategies in different regions.

Secondly, the performance of pure benzene in the external market remains strong, with significant stability and slight fluctuations during the Spring Festival period. The FOB price in South Korea remains at $1039 per ton, which is still about 150 yuan/ton higher than the domestic price. The price of BZN has also remained at a relatively high level, exceeding $350 per ton. In addition, the North American oil transfer market came earlier than in previous years, mainly due to poor logistics transportation in Panama and a decrease in production caused by severe cold weather in the early stage.

Although there is pressure on the comprehensive profitability and operation of pure benzene downstream, and there is a shortage of pure benzene supply, the negative feedback on downstream profitability has not yet triggered a large-scale shutdown phenomenon. This indicates that the market is still seeking balance, and pure benzene, as an important chemical raw material, its supply tension is still ongoing.

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2、 Outlook on toluene market trends

On February 19, 2024, with the end of the Spring Festival holiday, the toluene market had a strong bullish atmosphere. The market quotations in East and South China have both increased, with average price increases reaching 3.68% and 6.14%, respectively. This trend is due to the high consolidation of crude oil prices during the Spring Festival, effectively supporting the toluene market. At the same time, market participants have a strong bullish intention towards toluene, and holders are adjusting their prices accordingly.

However, the downstream buying sentiment for toluene is weak, and high priced sources of goods are difficult to trade. In addition, the restructuring unit of a certain factory in Dalian will undergo maintenance at the end of March, which will lead to a significant reduction in the external sales of toluene and a significant tightening of market circulation. According to statistics from Baichuan Yingfu, the effective annual production capacity of the toluene industry in China is 21.6972 million tons, with an operating rate of 72.49%. Although the overall operating load of toluene on site is stable at present, there are limited positive guidance on the supply side.

In the international market, the FOB price of toluene has fluctuated in different regions, but the overall trend remains strong.

3、 Analysis of xylene market situation

Similar to toluene, the xylene market also showed a positive atmosphere when it returned to the market after the holiday on February 19, 2024. The mainstream prices in the East and South China markets have both increased, with average price increases of 2.74% and 1.35%, respectively. This upward trend is also affected by the rise in international crude oil prices, with some local refineries raising their external quotations. Holders have a positive attitude, with mainstream market spot prices soaring. However, downstream wait-and-see sentiment is strong, and spot transactions follow cautiously.

It is worth noting that the restructuring and maintenance of the Dalian factory at the end of March will increase the demand for external procurement of xylene to make up for the supply gap caused by the maintenance. According to incomplete statistics from Baichuan Yingfu, the effective production capacity of the xylene industry in China is 43.4462 million tons, with an operating rate of 72.19%. The maintenance of a refinery in Luoyang and Jiangsu is expected to further reduce market supply, providing support for the xylene market.

In the international market, the FOB price of xylene also shows a mixed trend of ups and downs.

4、 New developments in the styrene market

The styrene market has undergone unusual changes since the return of the Spring Festival. Under the dual pressure of a significant increase in inventory and slow recovery of market demand, market quotations have shown a broad upward trend following the logic of cost and the trend of the US dollar. According to data on February 19th, the high-end price of styrene in the East China region has risen to over 9400 yuan/ton, up 2.69% from the last working day before the holiday.

During the Spring Festival, crude oil, US dollars, and costs all showed a strong trend, resulting in a cumulative increase of over 200000 tons of styrene inventory in East China ports. After the holiday, the price of styrene detached from the impact of supply and demand, and instead reached a high level with the increase in cost prices. However, currently styrene and its main downstream industries are in a long-term loss making state, with non integrated profit levels around -650 yuan/ton. Due to profit constraints, factories that planned to reduce their workload before the holiday have not started to increase their operating levels. On the downstream side, the construction of some holiday factories is slowly recovering, and the overall market fundamentals are still weak.

Despite the high rise in the styrene market, the negative feedback impact downstream may gradually become apparent. Considering that some factories plan to restart in late February, if the parking devices can be restarted on schedule, the market supply pressure will further increase. At that time, the styrene market will mainly focus on destocking, which may to some extent drag down the logic of cost increases.

In addition, from the perspective of arbitrage between pure benzene and styrene, the current price difference between the two is around 500 yuan/ton, and this price difference has been reduced to a relatively low level. Due to poor profitability in the styrene industry and ongoing cost support, if market demand gradually recovers