The US and Iran are expected to sign a ceasefire agreement on Jun 19, and petrochemical players in China are paying attention to the progress. In the market, expectations are rising that the Strait of Hormuz might reopen and supply of crude oil and petrochemical products from the Middle East might recover if the ceasefire materializes. However, there are views that it might take a long time for supply from the Middle East to Asia to fully normalize. Market participants are taking a wait-and-see stance.

　 Since the Middle East situation deteriorated at the end of February, the inflow of feedstocks and petrochemical products from the region to Asia decreased. Instead of this, exports of Chinese petrochemical products expanded.

　 In the olefins market, due to a shortage of feedstock supply from the Middle East, naphtha crackers in various Asian countries were forced to be shut down or production was reduced until May. In the international market, prices were on an upward trend. However, as June began, the situation improved, and cracker operating rates in each country recovered more than expected. The sense of tight supply receded. However, demand for derivatives is weak across Asia, including China, and prices are softening.

　 In the aromatics market, if the Strait of Hormuz reopens, benzene imports from the Middle East are expected to increase. Additionally, as benzene facilities in China are scheduled to restart after maintenance, domestic supply is also likely to increase. On the other hand, due to a fall in crude oil prices, refinery operating rates might increase, and the production of toluene and mixed xylene (MX) might also increase. At the same time, demand for these products as gasoline blending components might strengthen. Therefore, players need to pay attention to the supply/demand balance.