1. Aromatics Rout: Nearly 80% of Products Decline
Sci99 monitored 53 aromatics and downstream products: in the period of May 22-28, only 7 products rose (13.21%), 4 held steady (7.55%), while 42 products fell, a staggering 79.25%. The aromatics sector weakness stems both from cost-side crude oil transmission and sluggish terminal demand — coatings, plastic products, and textiles all report insufficient orders, dampening raw material purchasing willingness.
Aromatics (benzene, toluene, xylene) are fundamental chemical feedstocks, and their price trend directly reflects real-economy activity. Among the 79% of declining varieties, toluene and xylene led the fall, dragged by seasonally declining blending demand. US summer driving season restocking is essentially complete, putting increasing pressure on Asian aromatics exports and intensifying domestic supply glut.
| Product | Weekly Change | Driver |
|---|---|---|
| Liquid Chlorine | -33.33% | Refrigerant demand slump |
| Ammonium Sulfate | -17.21% | Agri demand cools + export decline |
| Methyl Ethyl Ketone | -13.83% | Solvent demand weak |
| Industrial Naphthalene | +8.78% | Coking output cuts provide short-term support |
2. Climate Index Slipping Below Par: What the Signal Means
The petrochemical industry climate index reported 99.66 in April, entering the "below-normal" zone for the first time this year. The index comprehensively reflects supply, demand, inventory, and profitability — its decline signals the chemical industry is transitioning from "passive destocking" to "proactive destocking." While upstream refiners still retain some margin cushion, mid/downstream plant cutbacks have become widespread.
Critically, this round of chemical product declines differs fundamentally from the "cost-push" decline of Q4 2024 — that was crude oil surging and eroding margins; this round is demand collapse leading. This means even if crude rebounds, chemical product rallies will be capped without substantive demand recovery.
3. Outlook: Bottom Signals Still Unclear
In the near term, the chemical market lacks conditions for trend improvement. On cost: crude oil will likely range $80-95/barrel, providing neutral-to-weak support. On supply: previously idled plants are restarting, increasing marginal supply pressure. On demand: low-season effects combined with shrinking export orders will extend restocking cycles.
Recommendation: Maintain low-inventory strategy for mid/downstream; watch for the pre-peak-season restocking window in July. If WTI breaks below $80, brace for further chemical follow-through weakness. Key indicator to watch: MTO (methanol-to-olefin) plant operating rates — a leading indicator for PE/PP supply.
