China benzene stocks build, fed by both surging imports and domestic output

In June 2025, China's benzene imports reached 355 kilotons (kt). This figure represents a 5kt (12.35%) decline from May, primarily attributed to customs clearance delays. However, it signifies a 12.5kt (35.71%) increase year-on-year.

For the first half of 2025, China's total benzene imports amounted to 273kt, marking a substantial 98.53kt (56.47%) rise compared to the same period in the previous year.

The primary driver behind the surge in China's benzene imports is the global shift of downstream demand to China. In recent years, a strategic focus on building larger and more integrated enterprises has spurred significant downstream capacity expansion by China's private refiners and chemical producers.

Consequently, China has progressively shifted from being an importer of petrochemical intermediates to an exporter. The strong competitiveness of these new domestic facilities has contributed to the shutdown of downstream plants overseas, causing a sharp drop in benzene demand in those regions. Furthermore, persistently weak demand for benzene in gasoline blending from the U.S. Gulf Coast since 2024 has reduced global import needs, compelling Asian suppliers-especially those in South Korea-to become increasingly reliant on China as their sole major market.

Concurrently, the expansion of China's own downstream capacity has increased its fundamental reliance on imports. This, combined with speculative buying spurred by a favorable import arbitrage window, has further boosted the country's import volumes.

Excluding planned maintenance, benzene-related units operated stably overall in the first half of the year. Persistently weak demand for gasoline blending components supported healthy margins for toluene disproportionation (TDP) units, both in China and globally. This incentivized high operating rates and boosted benzene supply. Additionally, the commissioning of several new steam crackers in China increased the output of benzene as a by-product. As a result, domestic benzene production in the first half of the year reached approximately 10.85 million tons, a year-on-year increase of 7.6%.

Influenced by these factors, the domestic benzene market experienced a significant inventory build in the first half of the year. The total accumulation from January to June is estimated at 480kt, a figure that already exceeds the total for all of last year.

Currently, total benzene inventories in China are elevated, and the inventories in East China ports also posted increase since May this year. With significant new capacity still slated to come online and imports expected to remain high, market supply appears ample, making it unlikely for prices to show significant improvement.