Toluene Market Heats Up Amid Import Uncertainty; Buyers Rush to Secure Stocks

Key Highlights:

• Toluene Jumps to ₹72/kg: Offers surged to ₹71.50–72.00/kg across Kandla and Mumbai, with bulk deals seen at ₹68–69/kg on extended credit.
   
• Importers Hold Back: Uncertain shipment schedules and geopolitical risks in the Middle East have stalled new import offers.
   
• Pharma Demand Supports Market: Increased offtake from pharmaceutical players is driving inventory restocking.
   
• Refining Margins in Red: Naphtha-to-Toluene and Toluene-to-Benzene spreads fell below breakeven, pressuring margins and calling for price adjustments.

Price Snapshot and Spot Market Trends

• Toluene prices in the domestic market rose by ₹3/kg, driven by supply concerns as importers held back fresh offers.
• Current offers from traders (on 60-day credit terms) were reported at:
  1. ₹71.50++/kg ex-Kandla
  2. ₹72.00++/kg ex-Mumbai
• Market participants noted that importers are refraining from making offers, raising concerns among buyers. However, some bulk consumers were able to secure material in the range of ₹68–69/kg (basic) on 90-day credit terms.
• The price rally is largely linked to ongoing geopolitical tensions in the Middle East, coupled with a lack of clarity on shipment schedules.

International Benchmarks – Benzene FOB Korea Futures

1. 2H June 2025: $747/MT (up $10)
2. 1H July 2025: $750/MT (up $10)
3. 2H July 2025: $750/MT (up $10 week-on-week)

Supply & Demand: Supply Crunch and Inventory Panic Buying

• Supplies remained tight through June, and there is still no clarity regarding July shipments, according to a leading importer.
• Demand from the pharmaceutical sector—one of the key downstream segments—picked up from mid-May, leading to increased offtake.
• A trader noted, “Many buyers are keen to build inventories, but importers are maintaining a wait-and-watch approach amid uncertain shipment timelines.”
• Most end-users are scrambling to secure volumes in the spot market, leading to a sharp upward movement in prices.
• However, demand from other downstream applications—such as packaging, paints, coatings, and inks—remained weak, largely affected by early monsoon onset and bearish sentiment across sectors.

BTX Margin Outlook and Refining Economics

• Refinery margins are under pressure:
  1. Naphtha-to-Toluene spread narrowed to $98/MT, falling below the breakeven threshold of $150/MT.
  2. Toluene-to-Benzene spread turned negative at -$23/MT, far below the breakeven margin of $90/MT.
• A leading indentor commented, “An adjustment in toluene prices is necessary to restore margins for refiners.”
• India’s monthly toluene demand is estimated at around 57,000 MT, of which 9,600 MT is met by domestic producers like RIL and BPCL. The remaining ~45,000 MT is imported.

Market News: Global Benchmarks and Feedstock Indicators

• WTI Crude Oil: down 0.29% to $73.82/barrel
• Natural Gas:down 1.24 % to $3.84/MMBtu

Feedstock Price Trends

1. FOB Singapore Naphtha: $608/MT
2. FOB Korea Toluene: $725/MT
3. FOB Korea Benzene: $748/MT

Expert Opinion: Volatility Ahead Despite Demand Gaps

• Experts expects short-term volatility in the toluene market, driven by limited supply and geopolitical concerns. However, weak demand from the paints, coatings, and packaging sectors—due to off-season lull—is likely to resist any sharp upward trend in prices.
• With buyers actively trying to build inventories, the market may witness restricted spot availability and an artificially inflated price environment.