From Supply Fears to Oversupply Risks: Iran-US Deal Reshapes Asia’s Aromatics Outlook

Asian aromatics markets weakened on Monday after reports of an interim U.S.-Iran peace agreement raised expectations of lower crude prices and recovering petrochemical supply across the region.

While traders remain cautious due to the lack of finalized details, sentiment softened across benzene, toluene, mixed xylene, paraxylene and styrene monomer markets as buyers reassessed positions following months of supply disruptions and force majeure declarations, according to market sources.

Upstream crude oil prices tumbled as news broke of the peace deal, a move that trickled down to the domestic Chinese market following a sharp decline in Brent benchmarks. The August Brent swap contract slipped to $83.64/bbl on Monday at 9:30 a.m. Singapore time from $85.90/bbl at the close of Singapore trading at 4:30 p.m. on Friday, based on brokers’ opening swap numbers.

Buyers quickly emerged to replenish their MX inventories, capitalizing on the weaker prices. A H2 June cargo traded at 6,600 yuan ($976.45)/mt ex-tank while a H2 July cargo traded at 6,700 yuan/mt ex-tank in the morning trading session. On the other hand, bids and offers for prompt toluene cargo ranged between 6,560 yuan to 6,600 yuan/mt ex-tank, plunging by nearly 300 yuan/mt from Friday.

Meanwhile, trading in the Asian toluene and MX FOB Korea markets started quietly on Monday morning, with a muted reaction despite news of the peace deal. Market participants continue to adopt a wait-and-see approach, with some expressing skepticism as things could change at the last minute.

“I’m waiting for them to sign the agreement; before that, nothing is fixed, anything can change anytime,” a South Korea-based source said.

Conversely, trading activity picked up slightly during the morning session in the PX market as sellers emerged to offer September-arrival PX cargoes at $1,049–1,052/mt CFR China, though the offers failed to attract buying interest. On Friday, OPIS last assessed Asia toluene at $926.50/mt FOB Korea, MX at $944/mt FOB Korea, and PX at $1,102/mt CFR China.

Asian benzene markets moved lower on expectations that a potential U.S.-Iran peace agreement could ease supply concerns that have dominated the market for much of the second quarter. Morning trading activity was brisk, with a flurry of bids and offers emerging for second-half July and August-loading cargoes, although indications were around 2% below Friday’s close as market participants priced in the prospect of lower crude costs and improved feedstock availability.

The Middle East conflict had tightened regional aromatics supply after a series of force majeure declarations disrupted refinery operations across Asia. Refiners including Indonesia’s Chandra Asri, South Korea’s Yeochun NCC, Singapore’s PCS, and Thailand’s IRPC, SCGC and Rayong Olefins declared force majeure on refinery operations during March and April, reducing benzene production and contractual supply availability. A peace deal could allow maintenance programs to conclude as scheduled and encourage refiners to raise operating rates, increasing benzene output in the coming months.

Despite expectations of higher supply, some traders believe lower prices could revive Chinese import demand after weeks of limited spot purchases. East China benzene inventories fell sharply to 131,000 metric tons as of June 12 from 309,000 mt on March 6, a decline of nearly 58% and the lowest level since mid-November 2025. Market participants said buyers have largely deferred purchases amid price volatility and squeezed derivative margins, but restocking demand could re-emerge should prices stabilize at lower levels.

“Lower prices could encourage restocking activity to return,” said a Singapore-based trader. “Inventories are extremely low by historical standards, and many buyers have delayed purchases for weeks waiting for greater clarity.”

Previously, feedstock supply disruptions stemming from U.S.-Iran tensions led several Asian petrochemical producers to declare force majeure. Idemitsu Kosan declared force majeure on its PX shipments on March 16, followed by Hanwha TotalEnergies Petrochemical on April 13, and Hengyi Industries on April 28. In contrast, Thai Paraxylene Co. lifted its own declaration on April 30, just two days after its initial announcement.

For SM, traders were more cautious, expecting the prospect of cheaper crude and improved feedstock supply to pressure prices further. The conflict had also disrupted SM supply, with producers including Kuwait Styrene Co., Chandra Asri and Formosa Chemical and Fibre Corp. declaring force majeure during the height of the regional tensions. While a normalization of supply could weigh on prices, market participants said demand is unlikely to improve immediately.

“Buyers will probably stay in wait-and-see mode,” a China-based trader said. “If the market expects prices to move lower, most consumers will continue purchasing only on a hand-to-mouth basis.”

Several traders noted that uncertainty surrounding the reported agreement may also limit any immediate shift in purchasing behavior. While U.S. President Donald Trump has publicly declared that a peace deal has been reached, Iranian officials have yet to provide detailed confirmation, leaving market participants cautious about the durability and scope of any agreement.

—Reporting by Hazel Kumari, hkumari@opisnet.com and Serena Seng, sseng@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com