I. Market Review: Positive Sentiment and Upward Price Shift

Last week (August 26 – September 2), the domestic naphtha market broke free from its previous range-bound pattern, exhibiting a trend of "stability followed by gains, then accelerated upward momentum."

Data monitored by SunSirs shows that as of September 2, the benchmark price for naphtha was quoted at 8,800.00 RMB/ton. This represents an increase of 126.67 RMB/ton from the 8,673.33 RMB/ton recorded at the start of the week (August 26), marking a weekly rise of approximately 1.46%. Compared to the beginning of the month, the price has risen by 1.15%.

II. Fundamental Drivers: Geopolitical Cost Pressures and Shifting Supply-Demand Dynamics

The strong rally in naphtha prices last week was driven by a combination of macroeconomic geopolitical events and a supply-demand mismatch:

Cost Side: Geopolitics acted as a key driver. From late August through early September, tensions in the Middle East escalated again; concerns regarding potential disruptions to shipping in the Strait of Hormuz drove international crude oil prices higher. Consequently, overseas naphtha quotes rose. The significant increase in import costs eliminated room for domestic price declines and provided upward momentum.

Supply Side: Although refineries that had undergone maintenance earlier resumed operations—increasing self-produced supply—enterprises prioritized consuming internal resources, leading to a contraction in external procurement. Meanwhile, "inverted" import economics (where import costs exceed domestic selling prices) dampened traders' willingness to purchase; import volumes for August and September are projected to fall below 1 million tons, resulting in reduced external supply replenishment.

III. Market Outlook

In the short term, the naphtha market is expected to maintain a trend of high-level fluctuation with a bullish bias. Factors supporting this include firm crude oil prices, high import costs, and a bullish technical setup. However, as prices are currently at one-year highs and downstream acceptance of high costs is limited, any easing of geopolitical tensions or a significant pullback in crude oil prices could trigger profit-taking.

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.