On March 5, the energy and chemical sectors in the domestic futures market experienced a sudden reversal. During the morning session, aromatics-related products collectively surged, with the main contracts for styrene, pure benzene, PX, and PTA futures hitting limit-up gains. However, the market shifted dramatically in the afternoon session, as gains for some products narrowed rapidly. By the close, the main contracts for pure benzene and styrene futures settled up 6.21% and 5.96%, respectively, while PX and PTA futures rose 3.6% and 2.97%. Additionally, the main crude oil futures contract, which had surged nearly 14% intraday, also saw a significant pullback late in the session, ultimately closing 6.43% higher.
Market participants attributed the initial rally to escalating tensions between the U.S. and Iran, which drove crude oil prices higher and subsequently lifted aromatics prices. Tang Jianlin, an analyst at Zijin Tf Futures, explained that the uptrend in aromatics was driven by two clear factors: geopolitical conflicts pushing up crude prices, and market speculation that China may reduce its refined oil export quotas. Combined with expectations of tighter crude imports and planned output cuts by some refineries, supply and demand dynamics appeared to strengthen simultaneously.
However, market sentiment reversed sharply in the afternoon following reports that Iran had not blockaded the Strait of Hormuz. This led to the opening of limit-up boards for related products and a subsequent plunge in some contracts. Analysts widely agreed that the rally was not driven by improvements in fundamentals but rather by pure geopolitical risk premiums.
Pang Chunyan, chief chemical analyst at SDIC Futures, noted that the aromatics industry chain is highly dependent on imported crude oil, particularly as private refineries have increased their market share. Any reduction in refinery operations due to crude supply constraints would directly lead to a sharp decline in supply. Additionally, China's import dependence for PX and pure benzene stands at 20% and 18%, respectively, with major suppliers such as Japan, South Korea, and Singapore also reliant on imported crude. Expectations of output cuts among Asian refineries further intensified supply concerns. Downstream products saw weaker gains compared to upstream ones, reflecting a pattern of cost-driven strength at the production end.
Pang warned that if the logic of tightening crude supply is disproven, the energy and chemical sector could face correction risks. In the short term, market movements are entirely dictated by geopolitical tensions; any de-escalation would lead to a rapid unwinding of risk premiums, likely increasing volatility.
Shi Xiaohan, director of chemical research at New Lake Futures, described the rally as beyond expectations yet reasonable. Initially, the market had only considered the impact of conflicts on Iran's energy and chemical exports. As tensions escalated, precautionary output cuts by Asian refineries directly affected aromatics supply, triggering a catch-up in futures prices. Stronger performance in near-month contracts reflected market expectations of short-term supply tightening. Currently, spot and futures markets for pure benzene and styrene are moving in sync, with short-term capital inflows amplifying price fluctuations.
Feng Xiaofen, an analyst at Founder Midterm Futures, added that aromatics fundamentals remain decent, with the industry entering a maintenance season in March, leading to supply contraction and a gradual recovery in downstream demand. If the Strait of Hormuz resumes normal traffic, geopolitical risk premiums may quickly recede. Conversely, prolonged shipping disruptions and widespread refinery cuts could further drive aromatics prices higher.
According to Zhao Ruochen, a senior analyst at Galaxy Futures, geopolitical tensions have completely overshadowed fundamentals, becoming the sole dominant factor in the short-term energy and chemical sector.
Pang Chunyan further noted that over the long term, any easing of U.S.-Iran tensions and a subsequent decline in crude prices would weaken cost support for aromatics, leading to a rapid reduction in accumulated risk premiums. In the near term, however, volatile sentiment may cause sharp price swings to become commonplace.
Looking ahead, analysts recommend monitoring three key signals: the actual navigation status of the Strait of Hormuz, changes in operating rates of domestic and international refineries, and China's refined oil export policies. Until geopolitical tensions clearly ease, high volatility in the energy and chemical sector is expected to persist, and traders are advised to implement risk controls and trade rationally.