After three consecutive quarters of decline, China's benzene imports reached a pivotal turning point in October. Latest data reveals that October imports totaled 496,800 metric tons, marking a substantial 14.18% month-on-month increase and successfully reversing the downward trend observed over the preceding three months. This shift reflects both the restructuring of global aromatics trade flows and subtle changes in China's domestic supply-demand dynamics.

From the perspective of import sources, the increase in October's benzene imports exhibited a distinct “major player-driven” characteristic. Data shows that of the 62,000-ton increase in October compared to September, South Korea alone contributed 43,000 tons, with some traditional Southeast Asian sources also providing minor supplements. As a major global benzene exporter, South Korea's “increased focus” on the Chinese market was no coincidence.

Following the U.S. tariff hikes on imported goods, the arbitrage window between the U.S. and South Korea remained closed for an extended period, forcing South Korea to redirect substantial export volumes to China. Reviewing the third quarter, China's benzene imports from South Korea dropped from 263,600 tons in July to 203,400 tons in September, serving as the core driver behind the continuous decline in total imports. This trend reversed in October, driven by the waning impact of South Korean plant maintenance. Since August, maintenance at reforming and cracking units operated by companies like Hanwha and Total has gradually concluded, significantly restoring their supply capacity.

Notably, shifts in the Asian gasoline market also indirectly fueled the import increase. Catalytic reforming serves as the core process for benzene production in South Korea and Southeast Asia, yielding high-octane gasoline as a byproduct. In October, declining gasoline demand in Asia prompted the diversion of aromatics resources back to chemical products from blending applications. This shift, coupled with the rebound in refining margins for gasoline driving higher reforming unit utilization rates, collectively supported increased exports to China.

The rebound in China's benzene imports stems not only from increased external supply but also from domestic demand expectations.

October saw significantly higher domestic benzene production losses due to maintenance compared to the previous month. Concurrently, two styrene plants with annual capacities of 600,000 tons each planned to start operations. These dual factors fueled market expectations of improved supply-demand dynamics, directly driving active import transactions.

As the largest downstream sector for benzene, styrene capacity releases play a crucial role in driving feedstock demand. Data indicates styrene accounts for over 40% of benzene consumption. China's domestic styrene capacity reached 20.865 million tons in 2023, marking an 18.7% year-on-year increase and sustaining upstream benzene demand.

The seasonal decline in China's benzene imports during Q3 was linked to Middle Eastern and Indian aromatics resources shifting to North America due to robust U.S. summer gasoline blending demand. Following the U.S. gasoline specification switch in October, Asian benzene supplies returned to the market, resonating with domestic demand expectations and driving a rebound in China's imports.

Despite the notable recovery in October imports, the fundamental “strong supply, weak demand” pattern in the fourth-quarter benzene market remains unchanged, keeping prices under significant pressure.

Current domestic benzene balance sheets indicate a persistent supply surplus in the fourth quarter. On one hand, the caprolactam industry has initiated coordinated production cuts, directly reducing benzene demand; On the other hand, uncertainty persists regarding the rumored maintenance plan for a major producer's 600,000-ton-per-year benzene facility, scheduled for Q1 next year, which will not alleviate the current supply-demand imbalance. Short-term demand from U.S. blending has driven a low-level rebound in domestic prices, but benzene prices may still decline if the U.S.-Korea arbitrage window fails to open.

Regarding future benzene import trends, the short-term rebound is expected to be unsustainable, with November imports potentially declining as South Korean aromatics shift supply to the U.S. Long-term, as new domestic benzene capacity comes online, import substitution will gradually advance, likely putting imports on a downward trajectory. With current high plant operating rates and anticipated port inventory increases, the fundamental outlook remains bearish for benzene prices.

As an integrated internet platform providing benchmark prices, on December 4, the benchmark price of benzene on SunSirs was 5231.00RMB/ton, a decrease of 0.32% compared with the beginning of the month (5247.67 RMB/ton).

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