Domestic Toluene Market Strengthens Despite Weak Downstream Demand

Key Highlights:

• Toluene prices rose ₹2/kg due to stronger crude oil trends, even as downstream demand stayed weak.
• Paint and coating demand remains muted, hit by monsoon-related production slowdowns.
• Pharma sector demand may rise, offering limited support to market sentiment. 
• Margins under pressure: BTX spreads remain below breakeven, signaling upstream stress.

Price Update: Toluene Inches Up ₹2/kg on Crude Oil Strength

Toluene prices in the Indian domestic market rose by ₹2/kg this week, mainly due to a sharp increase in crude oil prices.

Latest market offers from traders were reported at:

₹65.00++/kg ex-Kandla

₹65.50++/kg ex-Mumbai (60-day credit terms)

Meanwhile, bulk import offers remained competitive, ranging between ₹63.50–64.50++/kg ex-Kandla, also on 60-day credit terms for July lifting.

Despite the price increase, demand from paint and coating manufacturers—key downstream consumers—remained subdued, as monsoon-related disruptions impacted production.

Asian Benchmarks – Benzene FOB Korea Futures

1H July 2025: $721/MT (↓ $5 WoW)

2H July 2025: $722/MT (↓ $5 WoW)

1H August 2025: $720/MT (↓ $4 WoW)

Demand-Supply Dynamics: Pharma Outlook Brightens, Paints Remain Dull

Supply improved as Indian producers ramped up operations and multiple import cargoes are expected to arrive in the second half of July.

Pharmaceutical sector demand is expected to rise in the coming weeks, providing some optimism to market players. However, an importer noted that most bulk buyers had already secured July inventories last month amid the Iran–Israel geopolitical tensions, which could limit further buying in the near term.

A leading investor added that rising crude oil prices may push up toluene prices further, as production costs increase. The current crude rally has been driven by speculation that the US is planning to impose new sanctions on Russian oil.

On the feedstock front, the Asian benzene futures curve remains in backwardation, pointing towards a bearish outlook. Demand from other downstream industries—such as packaging, inks, paints, and coatings—remains weak, with monsoon-related disruptions and a lack of market confidence weighing on sentiment.

Market Trends & News: Crude Rises on Russian Sanction Fears

Refinery margins continue to face pressure:

Naphtha-to-Toluene spread: Narrowed to $81/MT, well below the breakeven level of $150/MT

Toluene-to-Benzene spread: At $57/MT, also below the typical breakeven margin of $90/MT

India’s monthly demand for toluene is estimated at around 57,000 MT, with about 9,600 MT supplied by domestic producers such as RIL and BPCL, while the rest (~45,000 MT) is met through imports.

Market News & Feedstock Trends

WTI Crude Oil: ↑ 0.13% to $68.54/barrel

Natural Gas: ↑ 3.88% to $3.44/MMBtu

Feedstock Prices: Refiners Face Breakeven Challenges

FOB Singapore Naphtha: $583/MT (↓ $10)

FOB Korea Toluene: $664/MT (↑ $4)

FOB Korea Benzene: $721/MT (↓ $5)

Expert Insights: Price Volatility Likely—Buyers Should Stay Cautious

Experts expect short-term volatility in the toluene market. Rising crude oil prices, along with possible US sanctions on Russian crude, could drive prices higher—even if downstream demand remains weak. Buyers are advised to stay cautious amid ongoing geopolitical uncertainty.