Toluene Market Sees Price Drop on Weak Sentiment; Seasonal Demand Could Offer Stability
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Toluene prices have seen a decline of ₹2/kg this week, with rates hovering at ₹73-74 per kg for importers and ₹74-75 per kg for traders. Limited bulk purchases are reported due to cautious buyers expecting further corrections. While port inventories are high due to recent slowdowns, rising demand from the pharmaceutical and paints sectors may support prices soon.
Key Takeaways:
- Price Decline: Toluene prices dropped by ₹2/kg this week, influenced by weak upstream dynamics in the crude and naphtha markets.
- Supply & Demand Dynamics: Port supplies remain high due to slow downstream activity and holiday-related production reductions.
- Expected Demand Surge: Increased production in pharmaceuticals and the return of the paints season may stabilize demand.
- Global Market Influence: Price trends in crude oil, natural gas, and feedstocks continue to impact the Toluene market.
Current Toluene Price Trends
- Importers have reduced Toluene prices by ₹1/kg, now offering at ₹73++ per kg Ex-Kandla and ₹74++ per kg Ex-Mumbai on 60 days credit terms. In contrast, traders are quoting slightly higher rates at ₹74++ per kg Ex-Kandla and ₹75++ per kg Ex-Mumbai under similar credit terms.
- No significant bulk deals were reported this week as major volume buyers are expecting further price corrections due to weak upstream dynamics in the crude oil and naphtha markets. On a week-on-week basis, Toluene prices declined by ₹2/kg, driven by bearish market sentiments and lower replacement costs.
Chemical Supply & Demand: Seasonal Impacts and Expectations
- Supply levels at major ports remain ample, primarily due to slow liquidation in October 2024, attributed to reduced downstream production during the Navaratri and Diwali holidays.
- However, bulk drug production is expected to see a surge in November as demand for key pharmaceutical ingredients such as Sartans (Losartan, Valsartan, Telmisartan), Dichlorophenylacetone, Diclofenac, and Ciprofloxacin shows improvement.
- Additionally, the resumption of the paints and coatings season is expected to provide long-term support for Toluene demand. India's monthly Toluene demand is estimated at around 57 kt, with domestic producers like Reliance Industries Ltd (RIL) and Bharat Petroleum Corporation Ltd (BPCL) contributing approximately 9.6 kt per month. The remaining demand of about 45 kt is met through imports.
Chemical Market News: Plant Closures and Production Updates
- In the international market, upstream crude oil benchmark WTI prices fell by 0.91% to $71.70 per barrel, while natural gas prices saw a slight increase of 0.55% to $2.70/MMBtu.
- Feedstock FOB Singapore prices rose by $3 to reach $650/MT. Downstream, FOB Korea Toluene prices were recorded at $720/MT, and FOB Benzene prices stood at $885/MT.
- Formosa Chemicals & Fibre Corp (FCFC), a leading producer of Para Xylene and Ortho Xylene in Huizhou, China, had shut down its plant in the first half of October 2024 for an annual maintenance turnaround. The shutdown is expected to continue until mid-November 2024. The plant has a production capacity of 870 kt per annum.
Expert Insights: Chemical Market Sentiment and Demand Projections
As per experts, Toluene prices may exhibit mixed trends in the upcoming week due to weak trading sentiments. However, expected demand from the pharmaceutical sector and seasonal demand from the paints and coatings industry is likely to provide some stability to Toluene prices in the short term.
Daily Market Report
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