Indian Toluene Market Sees Price Correction; Seasonal Demand from Paints & Pharma Expected to Drive Recovery

Key Takeaways

• Price Decline: Toluene prices have decreased by Rs 2/kg, with importers offering the product at Rs 78.50++ per kg ex-Kandla and Rs 79++ per kg ex-Mumbai.
• Benzene Future Influence: The price correction is driven by a drop in FOB Korea Benzene futures, with current prices for January and February contracts at around $861-$866.
• Demand Forecast: Demand recovery is expected in January 2025, especially in the paints and coatings industry, as well as from the bulk drug manufacturing segment.
• Supply Situation: India’s monthly toluene demand stands at 57 kt, with approximately 45 kt met through imports and the rest supplied by domestic producers like Reliance and BPCL.
• Expert Insights: Experts anticipate volatility in the toluene market in the coming weeks but foresee price stability in the short term due to seasonal demand spikes. 

Toluene Price Decline

• Toluene prices have witnessed a Rs 2/kg decline, with importers now offering the product at Rs 78.50++ per kg ex-Kandla and Rs 79++ per kg ex-Mumbai for 60-day payment terms. 
• Traders are quoting slightly lower prices of Rs 78++ per kg ex-Kandla and Rs 78.50++ per kg ex-Mumbai for advance payment transactions.
• A notable drop in FOB Korea Benzene futures primarily drives the price correction.
• FOB Korea Benzene Future Contracts:
  1. FOB Korea Benzene 1H Jan 2025: $862
  2. FOB Korea Benzene 2H Jan 2025: $861
  3. FOB Korea Benzene 1H Feb 2025: $866
  4. FOB Korea Benzene 2H Feb 2025: $865

Balanced Supply and Rising Toluene Demand

• The supply scenario remains relatively balanced, though marginally affected by lower liquidation volumes observed in December 2025. 
• Demand recovery is anticipated in January 2025, bolstered by seasonal factors and increased requirements from the paints and coatings industry.
• Additionally, growing demand from the bulk drug manufacturing segment is likely to provide further support.
• From a BTX perspective, the naphtha-to-toluene spread has improved from $99 to $110, though it remains below the breakeven level of $150. 
• Conversely, the toluene-to-benzene spread is favorable at $100, comfortably exceeding the breakeven threshold of $90.
• India’s monthly toluene demand stands at approximately 57 kt, with domestic producers such as Reliance Industries Ltd. 
• (RIL) and Bharat Petroleum Corporation Ltd. (BPCL) supplying around 9.6 kt per month. The remaining demand, about 45 kt, is met through imports.

Chemicals News

• In global markets, upstream crude oil benchmarks saw marginal fluctuations. WTI crude oil prices decreased by 0.29%, closing at $73.09 per barrel. Meanwhile, natural gas prices experienced a notable drop of 1.55%, settling at $3.59/MMBtu.
• Feedstock price trends were mixed:
  1. FOB Singapore Naphtha: $645/MT
  2. FOB Korea Toluene: $755/MT (a $5 decrease)
  3. FOB Korea Benzene: $855/MT (a $5 decline)
• Pertamina, a leading PX producer based in Cilacap, Indonesia, commenced a plant turnaround in late December 2024. The facility has a production capacity of 270 kt/annum of PX.
• Additionally, another PX manufacturer in Tuban, Indonesia, announced a plant turnaround during the last week of December 2024. This facility has a production capacity of 780 kt/annum.

Expert Opinion: Volatility Ahead for Toluene Price

Experts foresee volatility in toluene prices in the coming weeks, driven by increased demand from the pharmaceutical sector. Seasonal activity in the paints and coatings industry is also expected to provide short-term price stability. Buyers are advised to monitor market conditions closely and capitalize on inventory opportunities during price dips.