Toluene Prices Under Pressure! Traders and Importers Quote Lower Rates

Key Highlights

• Price Drop: Toluene declined by ₹4/kg; offers range ₹72.50–₹74.00/kg.
• Market Pressure: Weak crude oil and benzene corrections impact pricing.
• Supply & Demand: Packaging, paints, and coatings drive demand; bulk drugs remain weak.
• Global Market: WTI crude oil is slightly up at $66.50/bbl; naphtha, benzene, and toluene prices corrected.
• Expert Insights: Short-term bearish trend; cautious inventory management advised.

Toluene Price Trends & Market Movement

• Toluene prices have witnessed a sharp decline of ₹4/kg this week, primarily driven by bearish trends in upstream crude oil benchmarks. Importers' offers stood at ₹73.50++ per kg (ex-Kandla) and ₹74.00++ per kg (ex-Mumbai) for 60-day payment terms.
• Traders' offers were mixed but remained lower, with quotes at ₹72.50++ per kg (ex-Kandla) and ₹73.50++ per kg (ex-Mumbai) for immediate payment terms.
• The price drop is attributed to a significant correction in FOB Korea Benzene contracts.
• Future Contracts of FOB Korea Toluene:
  A. 1H March: $849/MT (Down $30 this week)
  B. 2H March: $849/MT (Down $30 this week)
  C. 1H April: $850/MT (Down $30 this week)
  D. 2H April: $850/MT (Down $30 this week)

Demand-Supply Dynamics & Industry Impact

• The supply situation remains stable, with a steady frequency of vessel arrivals observed in January and February. February witnessed a notable improvement in liquidation compared to December. 
• However, despite strong demand from the packaging, paints, coatings, and ink industries due to seasonal requirements, the market turned bearish owing to corrections in upstream crude oil and benzene contracts. 
• The bulk drug segment continues to remain sluggish due to weak downstream consumption.
• From a BTX perspective, the naphtha-to-toluene spread has narrowed to 119, falling below the breakeven threshold of $150. On the other hand, the toluene-to-benzene spread remains favorable at $105, well above the breakeven mark of $90.
• India's monthly toluene consumption stands at approximately 57 kt. Domestic producers, including Reliance Industries Ltd. (RIL) and Bharat Petroleum Corporation Ltd. (BPCL), supply around 9.6 kt per month, while the remaining demand of nearly 45 kt is met through imports.

Global Market Developments & Key Updates

• On the global front, upstream crude oil benchmarks showed minor fluctuations. WTI crude oil prices registered a marginal increase of 0.3%, settling at $66.50 per barrel. Meanwhile, natural gas prices witnessed a notable decline of 1.88%, closing at $4.36/MMBtu.
• FOB Singapore Naphtha: $625/MT.
• FOB Korea Toluene: $744/MT.
• FOB Korea Benzene: $850/MT.

Expert Opinion and Future Outlook

• It is anticipated that mixed trend in toluene prices this week, primarily influenced by bearish upstream and feedstock prices. However, seasonal demand in the paints and coatings sector is expected to provide some support to prices.
• Buyers are advised to exercise caution while building inventory, as the market remains on a bearish trend.