Market Watch: Toluene Prices Decline as Industry Awaits Recovery (23rd-Jan-2025)

Toluene

25 Jan 20252 Min ReadDaily Market Report

Toluene prices have slightly declined, reflecting bearish market sentiment and subdued demand in key industries like paints and coatings. While domestic production remains stable, imports continue to meet the majority of demand. Global crude oil and feedstock price fluctuations, coupled with plant turnarounds in Southeast Asia, are influencing market dynamics.

Key Highlights

Price Update: Import prices: ₹76.50++/kg (ex-Kandla) and ₹77++/kg (ex-Mumbai) for 60-day terms.
Demand and Supply Trends: Paints and coatings industry demand remains weak, with anticipated recovery in January 2025.
Plant Turnarounds: Pertamina (Cilacap, Indonesia): 270 kt PX capacity.

Toluene Prices See Marginal Decline Amid Bearish Sentiment

Toluene prices have recorded a marginal dip of ₹1/kg, with importers now offering the product at ₹76.50++ per kg (ex-Kandla) and ₹77++ per kg (ex-Mumbai) for 60-day payment terms.
Meanwhile, traders are quoting slightly reduced prices of ₹76.75++ per kg (ex-Kandla) and ₹78.00++ per kg (ex-Mumbai) for transactions with 90-day payment terms.
This price adjustment is primarily attributed to bearish market sentiment prevailing in the sector.

Weak Demand Persists in Paints & Coatings Sector

The supply scenario remains largely stable, albeit slightly impacted by subdued liquidation volumes observed since December 2024. A gradual recovery in demand is expected in January 2025; however, the paints and coatings industry has yet to witness a significant rebound, as market participants anticipate further price corrections.
On the other hand, increasing demand from bulk drug manufacturing is providing some support to toluene consumption.
From a BTX standpoint, the naphtha-to-toluene spread has improved from $110 to $130, though it still lingers below the breakeven mark of $150.
In contrast, the toluene-to-benzene spread remains favorable at $120, comfortably surpassing the breakeven threshold of $90.
India’s monthly toluene consumption stands at approximately 57 kt, with domestic producers such as Reliance Industries Ltd.
(RIL) and Bharat Petroleum Corporation Ltd. (BPCL) contributing around 9.6 kt per month. The remaining demand, close to 45 kt, is fulfilled through imports.

Market News: Global Feedstock Prices and Spreads

On the global front, upstream crude oil benchmarks exhibited minor fluctuations. WTI crude oil prices registered a slight uptick of 0.27%, closing at $75.63 per barrel. In contrast, natural gas prices experienced a significant decline of 1.20%, settling at $3.95/MMBtu.
Feedstock Prices:
1. FOB Singapore Naphtha: $650/MT
2. FOB Korea Toluene: $780/MT
3. FOB Korea Benzene: $900/MT

Plant News: Southeast Asia PX Plant Turnarounds Impact Market Dynamics

Pertamina, a leading PX producer based in Cilacap, Indonesia, initiated a plant turnaround in late December 2024. The facility boasts a production capacity of 270 kt per annum of PX.
Additionally, another PX manufacturing unit located in Tuban, Indonesia, commenced a plant turnaround in the last week of December 2024. This facility holds a significant production capacity of 780 kt per annum.

Expert Opinion: Toluene Market Trends and Inventory Strategy

Market Anticipates a mixed trend in toluene prices in the upcoming weeks, largely influenced by subdued demand. Seasonal activity within the paints and coatings sector is expected to provide short-term price stability.
Buyers are advised to remain vigilant and closely track market conditions before making inventory decisions, as further price corrections are anticipated.a