Recently, the situation in the Middle East has continued to escalate, with rising tensions between the U.S. and Iran and disruptions to shipping safety in the Strait of Hormuz. International crude oil prices have fluctuated sharply, and the impact has quickly transmitted through the industrial chain:

Crude Oil → Toluene → Benzoic Acid → Sodium Benzoate

This directly affects purchasing costs, spot supply, delivery lead times, and quotation stability, and has become a key factor in current procurement decisions.

1. Price Transmission: Rapid Cost Increase & Higher Purchasing Expenses

• Toluene is the core raw material for benzoic acid, accounting for more than 60% of production cost.
• As a petroleum aromatic product, toluene price moves highly in line with crude oil.
• Sodium benzoate is produced from benzoic acid, so its price closely follows benzoic acid.
• Middle East tensions have raised the risk premium of crude oil, pushing toluene prices higher.
• Benzoic acid manufacturers face heavy cost pressure and have raised prices quickly.
• Sodium benzoate has risen accordingly, passively increasing buyers’ costs.

Direct impact on procurement:

Cost per batch has risen, and future restocking will face even higher prices.

2. Supply & Delivery: Factories Hold Offers, Tight Spot Supply & Longer Lead Times

• Due to high raw material volatility, most benzoic acid supplilers suspend public offers and adopt a wait-and-see attitude.
• Only small quantities of rigid demand orders are traded via private negotiation; spot supply is tight.
• Production and scheduling plans are unstable, leading to longer delivery lead times.
• Switching between feed-grade and food-grade production lines requires waiting, further reducing available supply.

Direct impact on procurement:

Harder to secure goods; difficult to obtain stable supply and on-time delivery.

3. Market & Quotation: Higher Volatility & Difficulty in Price Locking

• Crude oil and toluene fluctuate daily, shortening the validity period of quotations.
• Factories adjust prices dynamically based on costs, making longterm price locking difficult.
• Strong downstream inquiries and tight supply further support price increases.
• CIF and other sea freightbased quotations need to wait for monthend freight updates and cannot be confirmed quickly.

Direct impact on procurement:

Procurement plans are hard to implement; pressure on budgeting and cost control has increased.

4. Recommendations for Procurement Decisions

• Lock prices for rigid demand: Secure current prices and inventory to avoid further cost increases.
• Shorten procurement cycles: Reduce large longterm orders to lower volatility risks.
• Confirm lead times early: Finalize production schedules in advance to avoid stockouts.
• Monitor three key indicators: crude oil trend, toluene price, and production line operating status.