Toluene Prices Rise ₹3/kg as Crude Oil and Naphtha Rebound

Key Takeaways

1. Price Update: Toluene prices are now at ₹73++ per kg ex-Kandla and ₹74++ per kg ex-Mumbai (60-day credit terms).
2. Demand and Supply: Strong recovery in demand due to increased activity in paints, coatings, and pharmaceuticals.
3. Market Drivers: Rebound in upstream crude oil and naphtha prices, along with rising Asian FOB Korea Toluene benchmarks.
4. Global Market Updates: WTI Crude Oil increased slightly, closing at $70.12 per barrel.
5. Plant News: Formosa Chemicals & Fibre Corp's maintenance shutdown of a major production unit in Huizhou, China, until mid-November, impacts the regional supply of aromatics.

Toluene Price: Toluene Price Surge Amid Upstream Recovery

• Importers have increased Toluene prices by ₹3/kg, with current offers at ₹73++ per kg ex-Kandla and ₹74++ per kg ex-Mumbai for 60-day credit terms.
• Traders, however, are quoting marginally lower prices at ₹73++ per kg ex-Kandla and ₹73.00++ per kg ex-Mumbai for advance payment transactions.
• The uptick in domestic prices is driven by a significant rebound in upstream Crude Oil and feedstock Naphtha prices.
• A notable increase in Asian benchmark FOB Korea Toluene prices—rising by nearly $50 over the last two days—has spurred active bulk inquiries, with traders and bulk consumers ramping up inventory purchases, according to a leading importer.

Toluene Supply & Demand: Demand Recovery in Paints and Pharmaceuticals

• The supply situation remains balanced, albeit slightly constrained by low liquidation in the first half of November.
• However, demand has shown a notable recovery this week, driven by increased activity in the paints and coatings sector.
• Additionally, rising requirements from the bulk drug manufacturing segment are expected to bolster demand further.
• Key pharmaceutical ingredients, such as Sartans (Losartan, Valsartan, Telmisartan), Dichlorophenylacetone, Diclofenac, and Ciprofloxacin, are anticipated to see heightened production levels in the coming weeks.
• From a BTX perspective, the Naphtha-to-Toluene spread has improved, rising from $37 to $87, although still below the breakeven threshold of $150.
• Conversely, the Toluene-to-Benzene spread remains favorable at $190, well above the breakeven point of $90.
• Market participants suggest these dynamics could support a further $70/MT increase in Toluene prices in the near term.
• India's monthly Toluene demand is estimated at 57 kt, with domestic producers like Reliance Industries Ltd. (RIL) and Bharat Petroleum Corporation Ltd. (BPCL) collectively supplying approximately 9.6 kt per month. The remainder, around 45 kt, is met through imports.

Global Chemical Market and Supply Chain Developments

• In global markets, the upstream WTI Crude Oil benchmark rose by 0.04%, closing at $70.12 per barrel, while natural gas prices saw a 1.41% increase, reaching $3.38/MMBtu.
• Feedstock FOB Singapore Naphtha prices have eased by $3 over the past three days, now at $623/MT.
• Meanwhile, FOB Korea Toluene prices climbed by $10 to $710/MT, and FOB Benzene prices also increased by $10 to $900/MT.
• Formosa Chemicals & Fibre Corp (FCFC), a major producer of Para-Xylene and Ortho-Xylene in Huizhou, China, initiated its annual maintenance shutdown in early October 2024.
• The turnaround, expected to last until mid-November 2024, affects a plant with a production capacity of 870 kt per annum.

Expert Opinion on Toluene Prices in November 2024

Anticipates a bullish trend in Toluene prices over the coming weeks, driven by positive market sentiment and increased demand from the pharmaceutical industry. Seasonal activity from the paints and coatings sector is also likely to stabilize prices in the short term.