Cathay Pacific Haitong: Cracks in domestic and foreign refined oil products in July improved the price spread compression of aromatics and olefins

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that overall, the gap between domestic and foreign refined oil products has improved, and is particularly strong overseas. The price difference for aromatic olefins has once again been squeezed by naphtha, and downstream performance has mixed ups and downs. In July, the difference in gasoline and diesel cracking prices at major domestic refineries continued to improve month-on-month, while the gap for US refined oil products strengthened month-on-month. The cost of naphtha was strong, while the rise in the price of aromatic hydrocarbon products was blocked. Both supply and demand sides worked together to drive the cracking price difference of pure benzene, toluene, and xylene compared to naphtha to a month-on-month decline. The bank recommended polyester industry and refining and chemical leaders whose economy is expected to improve due to cost and demand-side pressure relief.

Cathay Pacific Haitong's main views are as follows:

Price spread data for July 2026 showed significant differentiation in the performance of various sectors

(1) In the refined oil sector, gasoline and diesel gaps at major domestic refineries improved month-on-month. Gasoline and diesel gaps increased by 30.6% and 67.8%, respectively, but the latest values were at a low level of 29.7% and 37.8% respectively in the past five years. Overseas gasoline, diesel and coal cracking price spreads have all been high for nearly five years, with diesel being particularly strong in July; (2) the olefin and downstream sectors, with the exception of propane oxide and polypropylene, all fell month-on-month. Among them, the price spreads of propylene - naphtha and ethylene - naphtha fell 71.1% and 60.1% month-on-month respectively; (3) in the aromatics and chemical fiber sector, the price difference between toluene and naphtha fell 68.3% month-on-month, and the price difference between benzene and xylene also fell month-on-month. Price difference correction; (4) The price difference of maleic anhydride was clearly fixed, and the co-production price difference of dimethyl carbonate and ethylene glycol also improved drastically by 106%. Methanol and The butyl acrylate price spread weakened. Overall, the gap between domestic and foreign refined oil products has improved, and is particularly strong overseas. The price difference for aromatic olefins has once again been squeezed by naphtha, and downstream performance mixed.

The difference in gasoline and diesel cracking prices at major domestic refineries continued to improve month-on-month in July

First, the fall in crude oil prices on the cost side left room for the gap to widen. Domestic refined oil prices were supported by the current price adjustment mechanism. The decline was less than that of crude oil, and the price spread widened; secondly, demand for refined oil products entered a seasonal peak season, providing solid spot support. July coincided with the peak of summer travel. Residents' driving trips and cross-provincial travel increased dramatically, gasoline consumption rebounded strongly month-on-month, and diesel demand escaped suppression during the rainy season in June, driving the acceleration of diesel shipments; Thirdly, although the start of main and local refineries rebounded in July, it remained relatively low. Social inventories were clearly reduced, and specifications and resources were tight in some regions, so refined oil prices received strong support.

In July, the gap between US refined oil products strengthened month-on-month. Among them, the crack gap in aviation coal increased the most

On the demand side, summer tourism in the US reached its peak in July. Combined with large-scale events, the number of cross-regional and international flights increased, domestic demand for aviation coal reached a new phased level, and travel consumption directly boosted spot purchases of aviation coal. At the supply level, US refineries generally maintained a high operating rate, but during the peak season of traditional gasoline consumption, refineries reduced aviation coal output, and aviation coal production declined sequentially. At the same time, the aviation coal supply gap continues in Europe and Asia, and the disturbance in exports of refined oil products from the Middle East has not completely subsided. Overseas purchases of US aviation coal continue, and aviation coal stocks are being eliminated, showing a different trend from gasoline and diesel inventories, increasing the flexibility of cracking price differences.

The average price difference between aromatic hydrocarbon “triphenyl” and naphtha fell month-on-month in July

On the cost side, due to geographical disturbances in the Middle East, the spot supply of naphtha is tight. Asian naphtha prices maintain strong resilience, and raw material costs increase profits in extruded aromatic hydrocarbon processing. The demand side has entered the traditional low season. Downstream styrene, solvent, chemical fiber and other industries have started poorly, terminal consumption recovery has fallen short of expectations, aromatic hydrocarbons have strong downward price resistance, and price increases on the product side are weak. The cost of naphtha was strong, while the rise in the price of aromatic hydrocarbon products was blocked. Both supply and demand sides worked together to drive the cracking price difference of pure benzene, toluene, and xylene compared to naphtha to a month-on-month decline.

Risk warning: macroeconomic policy changes; large fluctuations in crude oil prices; force majeure; changes in the geographical situation; demand falls short of expectations, etc.