SunSirs: Energy and Chemical Markets Diverge Amid Volatility; Crude Oil Rebound Fails to Mask Domestic Weakness

Recently, the international crude oil market has staged a rebound driven by escalating geopolitical conflicts. On May 8, the July futures contract for WTI crude closed up at $95.42 per barrel, while the July contract for Brent crude closed at $101.29 per barrel. Following accusations by Iran that U.S. forces violated ceasefire agreements by striking tankers near the Strait of Hormuz, market concerns regarding potential supply disruptions in the Middle East have once again intensified.

However, this rebound in international oil prices has failed to effectively buoy the domestic energy and chemical markets. Price quotes from May 9 indicate a general downward trend across products such as propylene, acrylic acid, pure benzene, and styrene. For instance, Satellite Chemical lowered the market price for its refined acrylic acid in East China by 800 RMB per ton to 9,700 RMB per ton, while Shandong Hualian reduced its ex-factory price for propylene by 350 RMB per ton to 9,273 RMB per ton. The butadiene market also faced significant pressure, with Sinopec Sales Company cutting its price by 500 RMB per ton to 12,800 RMB per ton, reflecting a prevailing bearish sentiment within the market.

Analysts suggest that the current domestic chemical market is constrained by weak downstream demand, mounting inventory pressures, and increased supply resulting from the resumption of operations at facilities previously undergoing maintenance. Consequently, the market is unlikely to track the upward trajectory of crude oil prices in the short term. Going forward, market participants should closely monitor the evolution of geopolitical dynamics and the pace of recovery in end-user demand.

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