Benzene and Crude Weakness Adds Bearish Tone to Toluene

Key Highlights

1. Current Prices: Imported toluene trades at ₹67–68/kg ex-Mumbai/Kandla; recent JNPT deals ranged ₹68–69/kg + tax.
2. Demand Drivers: Paints and coatings remain weak; pharma sector set for seasonal uptick.
3. Feedstock Pressure: Crude oil down ~3% in 10 days; benzene FOB Korea at $715/mt.
4. Market Outlook: Post-monsoon demand recovery expected; prices to track crude volatility.

Toluene Price Snapshot: Imports and Domestic Benchmarks

• Toluene prices edged down by ₹1/kg amid weaker buying interest and oversupply conditions. Imported toluene prices were reported at ₹67.5/kg ex-Mumbai and ₹67/kg ex-Kandla.
• Importers were actively offering bulk parcels at ₹68+ per kg ex-JNPT on 60-day credit terms. Deal levels in recent weeks ranged between ₹68.00–₹69.00/kg + taxes, with the following benchmarks recorded:

1. 8th September: ₹68.50 + Tax (Ex-JNPT)
2. 10th September: ₹69.00 + Tax (Ex-JNPT)
3. 11th September: ₹69.00 + Tax (Ex-JNPT)
4. 15th September: ₹68.00 + Tax (Ex-JNPT)

Supply–Demand Trends: Paints Slow, Pharma Steady

• A nearly 3% fall in crude oil prices over the past 10 days has pressured sentiment across the aromatics chain, according to market participants. 
• Demand from the paints and coatings sector - the largest consumer of toluene - remained subdued, as monsoon-related slowdowns curbed downstream production.
• However, the pharmaceutical sector is expected to lend some support in the coming weeks as manufacturers of APIs and intermediates scale up activity ahead of seasonal demand in September.
• Geopolitical tensions in the Middle East have stabilised, removing some of the earlier supply-side uncertainty.

Feedstock & Energy Market Update: Crude, Benzene, Naphtha

• Benzene FOB Korea futures were last assessed at $715/mt. The market corrected from $740/mt on 4 August to $720/mt on 11 September, pressured by weaker crude oil values, oversupply, and sluggish downstream demand. 
• A minor recovery mid-September reflected restocking activity, but sentiment remains cautious as prices hovered around $715/mt, indicating a bearish phase.
• WTI Crude Oil Futures: Up 0.52% to $62.85/bbl on supply concerns linked to Russia.
• Natural Gas Futures: Down 0.94% to $2.92/MMBtu, weighed by softer demand forecasts.

Feedstock pricing:

• FOB Singapore Naphtha: $64.99/bbl
• FOB Korea Toluene: $659/mt
• FOB Korea Benzene: $715/mt
• India’s toluene demand is estimated at ~57,000 MT per month. Of this, ~9,600 MT is supplied by domestic producers such as RIL and BPCL, while ~45,000 MT is covered by imports.

With the monsoon season nearing its end, demand recovery is anticipated in downstream industries such as inks, paints, coatings, and packaging. Additionally, the Indian government’s GST reduction for polymers is likely to benefit packaging and inks, providing indirect support to toluene consumption.

Expert Outlook: Post-Monsoon Recovery and Crude-Linked Volatility

• Market experts believe the Toluene market will continue to witness short-term fluctuations, closely tied to upstream crude oil trends. As a result, cautious trading is recommended. 
• The pharmaceutical sector could provide moderate demand support in September, while downstream paints and coatings are expected to revive post-monsoon.