Toluene Market Sees Price Hike as Crude Oil Shows Signs of Recovery
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Importers have increased the price of toluene by ₹1/kg, bringing it to ₹73.00/kg (Ex-Kandla), ₹73.50/kg (Ex-Hazira), and ₹73.50/kg (Ex-Mumbai) on 60-day credit terms. Trader offers varied, with quotes at ₹71/kg (Ex-Kandla) and ₹72/kg (Ex-Mumbai) on advance payment terms.
Chemical Price
- Importers have increased the price of toluene by ₹1/kg, bringing it to ₹73.00/kg (Ex-Kandla), ₹73.50/kg (Ex-Hazira), and ₹73.50/kg (Ex-Mumbai) on 60-day credit terms.
- Trader offers varied, with quotes at ₹71/kg (Ex-Kandla) and ₹72/kg (Ex-Mumbai) on advance payment terms.
- Bulk consumers are currently hesitant to build inventories due to the backwardation in benzene futures contract prices.
- FOB Korea benzene futures contract prices are as follows:
- 2H Sep FOB Korea Benzene: $953/ton
- 1H Oct FOB Korea Benzene: $919/ton
- 2H Oct FOB Korea Benzene: $918/ton
- 1H Nov FOB Korea Benzene: $906/ton
Chemical Demand and Supply
- Supply remains ample, with a significant number of toluene vessels arriving in August and the first half of September. However, liquidation was sluggish in early September due to heavy rains, floods, and festival holidays.
- Additionally, a sharp decline in upstream crude oil and naphtha prices created bearish market sentiment across Asia. Crude oil prices have shown some recovery, and the Chinese market is expected to resume activity after the Mid-Autumn Festival holiday.
- Demand from major consumers—such as bulk drug manufacturers, packaging, printing inks, and adhesive manufacturers—was moderate in September, but a leading importer anticipates robust demand starting in October.
- Market participants have noted that the import cost of current inventory is significantly higher than spot prices, which are at least ₹13-14/kg cheaper. All eyes are on the direction of crude oil, which will influence the replacement cost for October and November shipments.
- India’s monthly demand for toluene stands at approximately 57,000 MT. Domestic producers, including RIL and BPCL, contribute around 9,600 MT, while an average of 45,000 MT is imported monthly.
- In the petrochemical cracking sector, margins for toluene disproportionation (TDP) units remain negative, with a price spread between Naphtha and Toluene at $100/tonne, compared to the required breakeven spread of $150/tonne. This could exert pressure on naphtha prices moving forward.
Chemical News
- Zhejiang Petroleum & Chemical (ZPC) has restarted its No. 2 Monoethylene Glycol (MEG) unit, located in Zhoushan, Zhejiang, China. The unit has a production capacity of 800,000 tonnes/year.
- Jinling Huntsman has resumed operations at its propylene oxide (PO) plant, located in Nanjing, Jiangsu Province, China, with a production capacity of 240,000 tonnes/year.
Expert Opinion
- It is expected that toluene prices are likely to remain mixed this week due to bearish market sentiment and surplus inventory at ports.
- However, prices may recover as upstream crude oil shows signs of rebounding after reaching a three-year low.
- Buyers are advised to consider inventory opportunities, as current spot prices are lower than inventory and replacement costs.
Daily Market Report
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