Crude Rally and Geopolitical Risks Push Toluene Higher; Acetone Markets Watch Benzene, Propylene

Market Price

• Importers have raised Toluene prices by ₹1/kg, with bulk deals now quoted at ₹68.50++ Ex-Mumbai and ₹68.00++ Ex-Kandla on 60 days credit terms. Traders' spot offers are even firmer, ranging between ₹70-71++ Ex-Mumbai and Ex-Kandla on similar terms.
• Toluene prices have surged nearly ₹4.5/kg on a week-on-week basis, primarily driven by the sharp rally in crude oil prices and escalating geopolitical tensions between Iran and Israel.
• Acetone prices, meanwhile, remain relatively stable at ₹70++ Ex-Dahej on advance payment terms, while importer offers are slightly higher at ₹72.50++ Ex-Mumbai and ₹72.00++ Ex-Kandla. Week-on-week, Acetone prices have risen by ₹3/kg, supported by strengthening feedstock Benzene and Propylene prices.

Supply & Demand Dynamics

• Acetone supply remains comfortable, supported by continuous vessel arrivals and robust domestic production. The first half of June witnessed steady demand from bulk drug manufacturers, providing a firm support level. However, several vessels are scheduled for arrival through June and July 2025, which could result in a temporary oversupply situation, a market participant commented.
• The seasonal slowdown in demand from paints, coatings, and construction-related sectors, due to the onset of the monsoon, is expected to soften overall demand for Acetone. Despite sufficient availability, higher upstream feedstock costs and war-related volatility in global energy markets could still keep prices unpredictable in the short term, warned a leading importer.
• In contrast, Toluene's supply situation is tightening. Although availability was firm throughout May 2025 from both domestic production and imports, the ongoing Iran-Israel conflict has raised significant concerns over Iranian vessel arrivals for Toluene shipments in the near term.
• With crude oil and naphtha prices trending higher, refiners are focusing on maximizing conversion margins, limiting Toluene availability. Buyers are actively building inventories in anticipation of further supply disruptions, while sellers are restricting large-volume bulk offers, preferring limited spot deals until the next round of replacement cargo clarity emerges, according to a key trader.

Market News

• Global upstream energy benchmarks continue to reflect heightened geopolitical tensions:
  a. WTI Crude Oil rose 1.77% to $73.03/bbl
  b. Natural Gas increased 1.27% to $3.79/MMBtu
  c. FOB Korea Benzene at $763/MT
  d. FOB Korea Toluene at $707/MT
  e. CFR China Acetone at $745/MT

Expert Opinion

• The Toluene market is entering a highly uncertain phase. The Iran-Israel conflict has created significant disruptions in Middle Eastern supply routes. With no clear visibility on Iranian shipments in July 2025 and crude oil prices continuing to climb, buyers should remain proactive in securing inventories wherever possible to mitigate future price shocks.
• For Acetone, while supply remains healthy and multiple import consignments are expected in the coming weeks, underlying cost pressures from rising Benzene and Propylene prices could support continued volatility. Seasonal demand contraction from coatings and construction may soften overall consumption temporarily, but any correction in prices should be viewed as an opportunity for strategic inventory building.