Toluene Prices Drop Due to Cheaper Crude Oil and Falling Benzene Futures
Chemical Price
Toluene prices have been revised, with importers lowering rates by ₹1/kg. Current prices stand at ₹73.00/kg (Ex-Kandla), ₹73.50/kg (Ex-Hazira), and ₹73.50/kg (Ex-Mumbai) on 60-day credit terms.
Trader offers vary slightly, with quotes at ₹72.25/kg (Ex-Kandla) and ₹72.50/kg (Ex-Mumbai) for advance payment terms.
Bulk consumers are adopting a cautious approach towards building inventories due to ongoing corrections in upstream crude oil benchmarks and backwardation in benzene futures prices.
The FOB Korea Benzene Asian benchmark futures contract prices are as follows:
2H Oct FOB Korea Benzene: $929/ton
1H Nov FOB Korea Benzene: $908/ton
2H Nov FOB Korea Benzene: $907/ton
1H Dec FOB Korea Benzene: $898/ton
2H Dec FOB Korea Benzene: $897/ton
Chemical Demand and Supply
- The supply of toluene remains ample, with a significant number of vessels arriving in September. However, liquidation has been low, largely due to the upcoming Navaratri festival, which has resulted in bearish market sentiment for the first half of October.
- Additionally, the recent corrections in crude oil benchmark prices have affected toluene prices in both domestic and international markets.
- Liquidation was particularly sluggish during early October, as demand from pharmaceutical manufacturers slowed down. Backwardation in future benzene contracts is also adding to the bearish sentiment in the short term.
- Demand from sectors such as packaging, printing inks, and adhesives was moderate during the first half of October, influenced by the seasonal demand surrounding the Diwali festival.
- Market participants noted that current spot prices are higher compared to future contracts, indicating short-term price fluctuations.
- India’s monthly demand for toluene is approximately 57,000 metric tons (MT), with domestic producers like Reliance Industries Limited (RIL) and Bharat Petroleum Corporation Limited (BPCL) contributing around 9,600 MT. The remainder, roughly 45,000 MT, is imported monthly.
- In the petrochemical cracking sector, margins for toluene disproportionation (TDP) units remain under pressure, as the price spread between naphtha and toluene sits at $69/tonne, falling short of the $90/ton breakeven spread. This could lead to further corrections in naphtha prices.
Chemical News
- In the international market, upstream crude oil benchmark prices dropped, with WTI decreasing by 3.72% to $71.07/barrel.
- Natural gas prices also declined by 1.52%, bringing them to $2.45/MMBtu. FOB Singapore naphtha prices saw a reduction, reaching $664/MT.
- Deepak Phenolics is aiming to shut its Phenol/Acetone Unit in mid-October, 2024. The Unit is located in Dahej, Gujarat, India with Phenol production capacity of 300,000 Tons/Year and Acetone capacity of 185,000 Tons/Year.
- Sinopec-SK Wuhan Petrochemical has shut its Cracker for maintenance work. The Cracker is located in Wuhan, Hubei, China with Propylene production capacity of 550,000 Tons/Year and Ethylene capacity of 1.1 Million Tons/Year.
Expert Opinion
It is anticipated that toluene prices will remain mixed this week, reflecting the bearish market sentiment and excess inventory at ports. Buyers are advised to exercise caution when building inventory during this period.