[Lead] In August, toluene/xylene and related products generally showed a fluctuating downward trend. International oil prices were weak first and then strengthened; however, the end-demand for domestic toluene/xylene and related products remained weak. On the supply side, supply grew steadily due to capacity release from some new plants, and the weakening supply and demand fundamentals dragged most negotiated market prices downward. Only some products saw a slight price increase, driven by factors such as previous low prices and increased demand from the resumption of some downstream plants after maintenance. The supply and demand fundamentals of the September market will remain weak, but with pre-holiday stockpiling ahead of the short vacation, the market may stop falling or rebound slightly.
[Lead]
In August, toluene/xylene and related products generally trended downward with fluctuations. International oil prices were weak initially before strengthening; however, domestic end-demand for toluene/xylene and related products remained sluggish. On the supply side, steady growth was driven by capacity release from some new plants, weakening supply-demand fundamentals and dragging down most negotiated market prices. Only a few products saw slight price increases, supported by their previously low price levels and incremental demand from the resumption of some downstream plants after maintenance. The supply-demand fundamentals will remain weak in September, but with pre-holiday stockpiling ahead of the short vacation, the market may stop declining or stage a mild rebound.
Analysis Based on the Comparison of August Toluene/Xylene Prices and Fundamental Data
Overall, prices showed a downward trend, but after falling to low levels, downstream production profits improved slightly. Phased demand growth in oil blending and PX slowed the pace of price declines:
Multiple Negotiations on the Russia-Ukraine Issue & Saudi Arabia’s Continued Production Hikes Keep Market Bearish
Oil prices fell continuously this month with a large overall decline, as U.S. crude fluctuated mainly between $62-$68 per barrel. The U.S. held in-person talks with a European country, Ukraine, and some other European nations to discuss a genuine ceasefire for the Russia-Ukraine conflict, raising positive market expectations. Donald Trump also repeatedly signaled progress in the talks, leading to a continuous unwinding of geopolitical premiums. Saudi Arabia-led OPEC+ continued to increase production to seize market share; coupled with weakening U.S. oil demand and a slower pace of U.S. oil inventory drawdowns, fundamentals remained weak. Furthermore, economic data such as non-farm payrolls and services PMI began to soften, and the Federal Reserve signaled a rate cut in September, further confirming downside risks to the economy. The continuous decline in international oil prices was also a key factor fueling bearish sentiment in the toluene and xylene markets.
Adequate Profits from Toluene Disproportionation & MX-PX Short Process; PX Enterprises’ Phased External Procurement Supports the Two Benzene Markets
In August, toluene, xylene, and PX prices followed a similar fluctuation trend but with slight differences in amplitude, leading to a modest improvement in profits from toluene disproportionation and the MX-PX short process. Downstream PX enterprises continued to procure toluene and xylene in moderate quantities, preventing inventory growth at Shandong independent refineries and major Jiangsu ports from meeting expectations, thus providing strong support to market prices.
Divergent Supply-Demand Dynamics Between Toluene and Xylene Narrow Their Price Spread
In August, new plants such as Yulong Petrochemical and Ningbo Daxie started production, increasing supply. However, the supply growth was mainly concentrated in xylene, creating divergent supply-demand fundamentals between toluene and xylene. Despite price declines driven by bearish factors like falling international oil prices and weak demand, toluene’s drop was smaller than that of xylene, narrowing their price spread to 200-250 yuan/ton.
September Market Outlook
In September, the supply-demand fundamentals of toluene/xylene and related products will remain predominantly weak. The market may continue its weak fluctuating trend at the start of the month, but historical seasonal patterns show a tendency for improvement in September. Additionally, current market prices are mostly at a five-year low, and expectations of concentrated pre-holiday stockpiling ahead of the National Day holiday may provide some support, limiting price declines. Whether a rebound occurs will depend on changes in incremental demand. Below is an analysis of individual product trends:
Crude Oil: Prices Likely to Adjust Under Pressure with Narrow Fluctuations
Negotiations on the Russia-Ukraine issue will continue, with Ukraine agreeing in principle to a “territory-for-peace” deal. All parties are planning a trilateral meeting involving Ukraine, a European country, and the U.S. While the process will remain tortuous, it will provide clear support for oil prices at the bottom. However, a ceasefire is highly probable once follow-up talks are held, leading to further unwinding of geopolitical premiums. Saudi Arabia will continue to boost production, and the U.S. is entering a seasonal lull in oil demand. After a lackluster inventory drawdown during the peak season, the market fears accelerated inventory builds in the off-season, which will also weigh on oil prices. Furthermore, the Federal Reserve is likely to cut rates in September as expected, shifting market focus to the subsequent pace of rate cuts, resulting in a neutral overall impact on oil prices. Russia-Ukraine ceasefire talks, unwinding geopolitical premiums, economic slowdown, and oil inventory builds will all pressure oil prices to adjust weakly.
Toluene & Xylene: Negotiations Likely to Be Weak First, Then Strong
Domestic toluene and xylene markets are expected to trend lower first and then higher in September, with limited overall fluctuation range. Sinopec, PetroChina, and other producers will still prioritize self-use in September, but some enterprises will increase external sales slightly. Combined with incremental supply from new plants like Ningbo Daxie, the supply gap from Yulong Petrochemical’s planned operating rate cut will be filled. On the demand side, while historical trends show improved demand in September, there are no signs of a demand pickup yet. Only the widened MX-PX spread has kept downstream PX procurement expectations alive, providing strong price support. Additionally, low oil blending profits and low prices of related blending components will limit demand growth for oil blending. Comprehensive analysis suggests that overall supply-demand fundamentals remain weak, but current prices—at a five-year low—have strong resistance to further declines. Moreover, potential policy adjustments may boost market sentiment. Thus, the market is likely to be weak first and then strong in September, with narrow fluctuations.
Benzene: Expected to Consolidate Weakly Next Month
Benzene prices may consolidate steadily with a weak bias. On the cost front, crude oil is expected to adjust under pressure next month, with the overall fluctuation center shifting slightly downward. Fundamentally, downstream enterprises lack momentum to follow price increases due to insufficient new orders and persistently high inventories in secondary downstream sectors, creating significant resistance to price transmission. Only end-month downstream procurement expectations may provide some support.
PX: Market Likely to Consolidate with Narrow Fluctuations
Affected by developments in Middle East geopolitics, Fed rate cut expectations, and U.S. tariff policy disturbances, international oil prices are likely to trade weakly, providing limited cost support. Fundamentally, domestic PX’s concentrated maintenance period has ended, so overall supply will remain high. Additionally, the commissioning of some new MX capacity may boost PX output through external procurement of raw materials by PX plants. On the demand side, PTA enterprises are expanding maintenance due to low processing fees, exacerbating domestic PX’s supply-demand pressure and denting market confidence.
MTBE: Weak Supply-Demand but Cost Support to Drive “Weak First, Then Strong” Trend
Domestic MTBE supply is expected to increase further in September. Demand for gasoline is likely to remain stable; while pre-National Day stockpiling may generate some demand, its supporting effect is expected to be limited. Additionally, MTBE export negotiations are lackluster, putting downward pressure on prices. However, cost support will limit declines, leading to an expected “weak first, then strong” trend for MTBE prices.
Gasoline: Supply-Demand Pressure to Keep Market Weak with Fluctuations
Domestic gasoline prices may continue to fluctuate weakly in September. Crude oil is expected to adjust under pressure with a slightly lower fluctuation center, weighing on the domestic gasoline market. On the supply side, operating rates at major oil companies will edge down, but those at independent refineries will rise, ensuring sufficient gasoline supply. On the demand side, while the traditional “Golden September” peak season may drive a slight increase in gasoline and diesel demand, new energy substitution will limit the extent of improvement. Amid a mix of bullish and bearish factors, domestic gasoline prices are expected to fluctuate narrowly in September, with the average price likely to fall by 50-100 yuan/ton.
Post time: Sep-05-2025