Lead-in: In Q3, the average price of toluene surged by 45%, with the highest price in the Jiangsu market reaching 9,200 RMB/ton.
| Figure 1: Comparison Chart of Domestic Toluene Price Trends (USD/barrel, RMB/ton) |
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| Data Source: Chempricehub Information |
There are no signs of easing tensions between the US and Iran, pressure from Houthi forces on Saudi Arabia remains undiminished, and instability in the Middle East continues. The global crude oil supply gap may widen further in September. With geopolitical risks compounded by supply-demand imbalances, international oil prices are likely to maintain a firm trend at high levels. Against this backdrop, domestic toluene prices remain prone to rising rather than falling, with holders showing strong sentiment to push for price increases when opportunities arise.
Table: Price Comparison of Toluene and Raw Materials (USD/barrel, RMB/ton)
| Product | Mar 2 | Jul 1 | Sep 14 | Q2 Change (%) |
|---|---|---|---|---|
| WTI | 71.23 | 68.58 | 101.39 | 47.84% |
| Brent | 77.74 | 71.57 | 105.68 | 47.66% |
| Shandong Region | 5550 | 6085 | 8256 | 35.68% |
| Jiangsu Region | 5610 | 6085 | 8940 | 46.92% |
| Guangdong Region | 5615 | 6150 | 8900 | 44.72% |
Data Source: Chempricehub Information
Overall, although the toluene market price rose by 45% in Q3, the upward momentum primarily stems from the following aspects.
Cost-side support: Crude oil prices increased by over 47%, with a growth rate exceeding that of toluene.
Improved demand in the gasoline sector. In July, demand from the gasoline industry in the Shandong region improved. However, since chemical product demand was also stable during this period, the support from the gasoline side did not fully manifest. In August...
| Figure 2: Trend Chart of the Spread Between Toluene and Pure Benzene in Shandong Region (RMB/ton) |
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| Data Source: Chempricehub Information |
In September, the average spread between pure benzene and toluene in the Shandong region was 985 RMB/ton, with processing profits for the HDA process at 211 RMB/ton. Last week, the average spread between pure benzene and toluene in the Shandong region was 1,006 RMB/ton, with HDA processing profits at 221 RMB/ton. The average profit in July was 431 RMB/ton, a month-on-month increase of 498%. The average profit in August was 164 RMB/ton, a month-on-month decrease of 62%.
The spread between pure benzene and toluene recovered well in September. Additionally, due to the widening spread between xylene and toluene, purchasing interest from disproportionation plants has been attracted.
| Figure 3: Trend Chart of the Spread Between Toluene and Xylene in Shandong Region (RMB/ton) |
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| Data Source: Chempricehub Information |
In mid-September, geopolitical conflicts in the Middle East boosted international crude oil prices. Combined with domestic adjustments raising retail fuel prices, gasoline prices remained firm and trending upward, leaving ample room for raw material markets to rise. Since July, large-volume transactions for gasoline in the Shandong region have performed well. After prices climbed further in September, the volume of toluene entering the gasoline blending pool increased.
In the short term, with no signs of de-escalation in US-Iran conflicts and heightened navigation risks in the Strait of Hormuz and Bab el-Mandeb, concerns among industry participants regarding geopolitical situations and expanding supply gaps persist. Risk aversion is increasing, and international crude oil prices are expected to trade strongly in the near term, continuing to provide robust cost-side support to the toluene market.
Currently, gasoline inventories at Shandong local refineries are at year-to-date lows. With the Mid-Autumn Festival and National Day holidays approaching, there is an expectation for phased improvement in gasoline demand, suggesting gasoline prices will remain firm in September. As the spreads between toluene and pure benzene/xylene are maintained, interest from disproportionation and HDA processes in toluene remains undiminished. Stable consumption from both chemical and fuel sectors provides bottom-line support to the market.
Due to continuously rising domestic toluene prices, export negotiations have faced obstacles. Currently, corporate and market inventories are at low levels. It will be difficult for the impact of increased supply from restarted maintenance units to reflect in prices in the short term. Under the influence of pre-holiday stocking expectations before the Mid-Autumn and National Day breaks, toluene prices are expected to maintain strong oscillations.
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