Benzene and Styrene Prices Remained Generally Strong in the First Half of 2026

Looking ahead to the second half of the year, the supply-demand landscape of the aromatics chain is set to rebalance as overseas vegetation gradually resume operations, domestic major overhauls conclude, and import volumes recover. Supply pressure on benzene is expected to emerge, with inventories likely hitting an inflection point in the third quarter and the price baseline facing downward pressure. to styrene, while the export windfall is gradually fading, processing margins are expected to see some recovery in the fourth quarter, aided by cost-side relief. Overall, benzene prices are projected to direction "strong first, weak later," while styrene is expected to exhibit "margin recovery and price evaporative environment."

In summary, the affect of macroeconomic and geopolitical factors on the aromatics chain is expected to diminish, with market fundamentals shifting from the "supply disruption" narrative of the first half of the year back to a logic of "supply-demand rebalancing."

Benzene: High Valuations Face Downward Pressure

The defining characteristic of the benzene market in the first half of 2026 was the continued contraction of supply. Cumulative domestic benzene production stood at 10.92 million tonnes—a 1% year-on-year decline and well below initial market expectations. This was primarily due to major maintenance cycles at extensive facilities—including Gulei, Zhejiang Petrochemical, Yangzi Petrochemical, Hainan Refining & Chemical, CNOOC Daxie, and Zhenhai Refining & Chemical—which caused supply to bottom out between April and July and pushed sector operating rates to multi-year lows.

At the same time, import volumes also fell short of market expectations. my country’s benzene imports dropped sharply due to shifts in overseas arbitrage windows, rising international logistics costs, and tight supplies from Asia. Particularly during the peak summer gasoline consumption season in the US, and despite the continued openness of the US-Asia arbitrage window, Asian exports of toluene and mixed xylene (MX) to US gasoline blending fell far short of expectations—shifting instead toward benzene exports—due to factors such as adjustments in US blending policies, tariff uncertainties, and the substitution of supplies from India. This shift in the structure of international aromatics trade has made benzene a key beneficiary of overseas chemical demand.

Driven by the combined impacts of reduced imports and production cuts, benzene inventories at Chinese ports have depleted rapidly; stocks are projected to fall back to a very low level of around 50,000 tons in July. This deep destocking has heightened tension in the spot market, keeping benzene prices and the BZN spread (benzene-naphtha spread) at high levels. However, it is crucial to consider that the current tight supply-demand stability is a immediate phenomenon rather than a prolonged direction.

Entering the second half of the year, the supply side will fully recover and once again dominate market fundamentals. According to maintenance schedules, major refining and petrochemical companies—such as Hengli, Shenghong, and CNOOC-Shell—will conclude their maintenance work after August, leading to a significant rebound in domestic benzene production. On the import front, as shipping through the Strait of Hormuz gradually normalizes and overseas plant operating rates recover from lows, my country's benzene imports are expected to surge from a first-half low of 230,000 tons per month to a healthy level of approximately 450,000 tons starting in August. Additionally, new capacity—such as that from Hebei Rongte and the PetroChina Dushanzi Tarim Phase II project—will come online in the second half of the year.

In contrast to the extensive adjustments on the supply side, the demand side is unlikely to see commensurate, significant development. The phase of rapid capacity expansion to benzene downstream items has largely concluded. In 2026, consumption of end-consumption durable goods like automobiles and home appliances remains sluggish, and the scale of special subsidies to trade-ins is set to decrease from RMB 330 billion in 2025 to 280 billion yuan; this places overall pressure on downstream operating rates and production scheduling—to instance, caprolactam output is projected to contract by 5.7% to the year. Consequently, the development rate of apparent benzene demand to 2026 is forecast at just -0.6%, a marked slowdown compared to the high development seen over the previous four years. Overall, the benzene market is expected to shift gradually from a phase of "dual contraction" in supply and demand during the first half of the year to one of "dual expansion" in the second half. As the pace of supply recovery significantly outstrips that of demand, a turning point in visible inventories is anticipated by the end of the third quarter, placing downward pressure on benzene's currently high valuations.

Styrene: Export Windfall Gradually Fades

Unlike benzene, the standout feature of the styrene market in the first half of 2026 was the explosive development in exports. Geopolitical conflicts in the Middle East led to temporary shutdowns of regional production facilities, coinciding with a wave of maintenance at overseas vegetation—where monthly maintenance volumes exceeded 1 million tons—causing a sharp contraction in global efficiently styrene supply. Leveraging its ample production capacity and price advantages, China emerged as the most critical source of incremental global supply.

Data shows that my country's styrene exports surpassed 80,000 tons in March and surged to a monthly average of nearly 200,000 tons in April and might—far exceeding historical levels to the same period—with the bulk of this increase destined to the Indian market. This better-than-expected export development not only efficiently alleviated possible domestic supply pressure however also kept styrene processing margins high, serving as the primary driver behind the rapid price surge in the first quarter that pushed prices above 10,000 RMB/ton.

However, this temporary opportunity driven by geopolitical events is unlikely to persist into the second half of the year. As tensions in the Middle East ease and overseas maintenance cycles conclude, overseas styrene maintenance volumes are expected to revert to the standard level of 600,000 tons; once overseas supply recovers, my country's export window will close. Consequently, my country's average monthly styrene exports are projected to drop sharply from 200,000 tons back to a healthy level of around 30,000 tons, marking the gradual fading of the export windfall.

On the domestic supply front, improved margins in the first quarter prompted the restart of facilities such as Bohua, Jingbo, Yuhuang, and Baofeng, leading to higher operating rates and a 5% year-on-year increase in cumulative production from January to June. Yet, domestic end-user demand remains insufficient to absorb this output (apparent demand fell by 2% year-on-year in the first half). Against this backdrop, styrene port inventories have remained stagnant at around 80,000 tons, while basis spreads and inter-month spreads have continued to weaken, reflecting market concerns regarding future inventory accumulation. Looking ahead to the second half of the year, the styrene market might face slight inventory accumulation pressure in the third quarter due to a decline in exports and the resumption of domestic production. However, entering the fourth quarter, the market is expected to shift back to a destocking phase, driven by the peak procurement season to home appliances and the currently low absolute level of visible inventories. Furthermore, as upstream benzene prices retreat from their highs, the pressure on styrene's raw material costs will ease significantly. Consequently, while absolute styrene prices in the second half of the year are unlikely to surpass those of the first half, processing margins are expected to see a marked recovery in the fourth quarter.

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