A Comprehensive Explanation of the Current Divergence Logic, Inventory Bottom Lines, and Key Forward-Looking Variables in Petrochemical Futures

However, many people hold an intuitive misconception: when crude oil prices rise, petrochemical prices must follow suit. Reality is far more nuanced. Between crude oil and petrochemicals lies a 'transmission wall.' Whether this wall collapses depends on which specific product you’re buying, whether its feedstock is actually crude oil, how low inventory levels are, and whether logistics channels remain unimpeded. Let’s break down this transmission chain step by step. II. How Geopolitical Conflict Transmits to Petrochemicals Crude oil price increases represent only the first link in the cost chain. First, consider an easily overlooked fact: most Middle Eastern petrochemicals are *not* produced directly from crude oil. Except for a few niche products—such as paraxylene (PX)—which rely on crude oil and naphtha sourced from refineries, the majority of petrochemicals—including ethylene glycol, plastics, polypropylene (PP), benzene, and styrene—are derived from ethane. Methanol production in the Middle East, meanwhile, relies on natural gas. What does this imply? It means that even if Middle Eastern crude oil exports recover, petrochemical exports will *not* necessarily rebound in tandem—because crude oil and petrochemicals flow through entirely separate production chains. According to a Goldman Sachs report, Middle Eastern crude oil exports have already recovered to 70% of pre-war levels, yet refined product exports stand at only 35% of pre-war volumes. Petrochemical exports fare even worse. When refineries remain idle, naphtha supply dries up—and consequently, naphtha-dependent products like PX and benzene face acute shortages. Although ethane and natural gas coexist with crude oil underground, their extraction schedules and transportation logistics operate as independent systems. Naphtha Supply Disruption Overwhelms Asian Cracking Units The most direct consequence of the Strait of Hormuz blockade is a severe feedstock shortage for Asian cracking units. Over 60% of seaborne naphtha imports into Asia originate from the Middle East. With strait passage disrupted, this critical raw-material artery is severed. Average operating rates for ethylene cracking units across Northeast Asia have dropped from 83% to 73%; multiple cracking units in South Korea and Japan have been forced to reduce output or halt operations entirely. In March, two PX plants in Ulsan, South Korea—S-Oil’s 740,000-ton-per-year facility and Ulsan Aromatics’ 1-million-ton-per-year unit—entered unplanned maintenance shutdowns. Similarly, some facilities operated by Formosa Chemicals & Fibre Corporation (FCFC) and SK have scheduled shutdowns. Thus, although Japanese and Korean refineries have partially resumed operations, petrochemical output recovery lags significantly behind expectations. As overseas petrochemical production remains constrained, import-dependent Chinese markets benefit across multiple high-exposure commodities—ethylene glycol, methanol, benzene, PX, and plastics—all falling squarely within this logic. Why Liquid and Solid Petrochemicals Show Such Divergent Price Gains Facing identical Strait-of-Hormuz disruptions, liquid and solid petrochemicals exhibit vastly different price responses. Liquid petrochemicals—ethylene glycol, methanol, benzene, styrene, and butadiene—are extremely sensitive to inventory levels. Storage costs are high, and stringent storage conditions discourage bulk hoarding. Normal inventory levels are therefore kept deliberately lean; once imports halt, port inventories deplete rapidly, triggering immediate spot-market shortages—and inherently large price elasticity. In this round, ethylene glycol surged over 30% month-on-month from its trough, while methanol rose nearly 30%. Solid petrochemicals—plastics and PP—are easier to store, enabling traders to accumulate larger inventories for gradual digestion. Accordingly, their price volatility typically falls one tier below that of liquid petrochemicals.

Crude Oil Chemicals Procurement Planning Operations Manual

Manual Coverage Linkage to This Manual ① Procurement Department Process Management Manual Supplier management / Quotation & tendering / Procurement execution / Quality control / Payment processing / Training, etc.—full-process SOPs When executing the "Weekly Execution Checklist" in this manual → triggers procurement execution and order management SOPs in the Process Management Manual ② Procurement Department Establishment Blueprint Organizational structure / Staffing plan / Policy system / IT infrastructure / Implementation roadmap This manual assumes the procurement department is already operational. If still in the establishment phase → refer to the staffing and IT planning sections in the Establishment Blueprint ③ Commodity Market Analysis Operations Manual Three-tier deep-dive analysis methodology / Category-specific indicators & data sources / Analysis templates and quick-reference cards Step Two of this manual—"Overlaying Market Strategy" → requires referencing trend judgments from the Market Analysis Manual. The two manuals are designed for joint use: the Market Analysis Manual answers "*Which phase* is the market in?", while this Procurement Planning Manual answers "*How much* should we buy?" 9.3 Future Development: From Excel to Integrated Systems Procurement planning is fully feasible via manual Excel operations during Phase 0 and Phase 1. With ERP system rollout (per the Establishment Blueprint’s Phase 1), the following functions can be progressively automated: · ERP MRP Module: Automatically runs material requirements planning (MRP) based on production plans and BOMs, generating procurement recommendations—replacing manual demand-gap calculations · ERP Inventory Module: Provides real-time inventory visibility and automatically issues alerts when stock falls below safety thresholds—replacing manual inventory checks · SRM System: Enables online supplier lead-time confirmation and real-time PO status tracking—replacing phone/email follow-ups · Procurement Dashboard: Compares monthly procurement plans against actual execution, auto-generating post-mortem reports—replacing manual reconciliation spreadsheets Appendix: Full Template Quick-Reference Appendix A Monthly Procurement Plan Approval Form (Template) Field Content Planned Month August 2026 Prepared By Procurement Department – Raw Materials Category Team Date Prepared July 27, 2026 Basis for Plan ① Production Planning Department’s August production schedule ② Week 4 Trend Assessment from the "Procurement Market Analysis Manual" (July) ③ Inventory count data as of July 26 Brief Market Context (≤200 words) Brent crude oscillated between USD 65–75/barrel in July, showing no clear directional bias. Base oils: SK Korea plans a September turnaround; mid-August marks the pre-turnaround stocking window. Palm oil: MPOB’s July report revealed lower-than-expected stocks—providing short-term support, though the seasonal production uptick remains intact. Ethylene oxide (EO): East China plant utilization stands at 85%, with stable supply. Propylene oxide (PO): New capacity is expected to come online in Shandong, exerting downward price pressure. Total Planned Value Approx. ××× million RMB Funding Confirmed? □ Yes (confirmed by Finance Department’s ×××) □ No (shortfall of ××× million RMB; coordination required) Approvals Procurement Manager: ______ Date: ______ Procurement Director: ______ Date: ______ Finance Director: ______ Date: ______ Appendix B Safety Stock Parameter Setting & Review Form (Template) To be reviewed quarterly. Category Current Safety Stock (Days) Avg. Supplier Lead Time (L/T) Demand Volatility Factor Transportation Risk Buffer Recommended Safety Stock (Days) Adjustment幅度 Rationale for Adjustment Approval

South Korea's SK Energy advances crude unit turnaround to mid-May, source says

May 11, 2026

SK Energy advanced maintenance on its 260,000 bpd No. 5 crude distillation unit to mid-May, citing optimized scheduling amid supply disruptions linked to regional conflicts. Multiple units at the Ulsan refinery remain shut or under maintenance, impacting overall processing capacity.

reuters

2026-05-11

South Korea's SK Energy advances crude unit turnaround to mid-May, source says

South Korea's SK Energy advances crude unit turnaround to mid-May, source says

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