[Introduction] In Shandong, toluene refineries are reducing prices to boost sales volume, employing a strategy of exchanging price for volume to clear inventories. Market buying on dips and export deals have supported a phased bottoming and rebound of toluene prices. Pressure to offload toluene has increased, leading refineries to actively lower ex-factory prices for inventory clearance. The weekly low point was 6,400 yuan/ton, down approximately 610 yuan/ton from last Thursday.

1. Shandong Toluene Prices Continue to Decline

The conflict in the Middle East persists, and navigation through the Strait of Hormuz remains suspended. International crude oil prices experienced a good uptrend during the week, but toluene prices in Shandong were significantly suppressed by demand, moving contrarily to oil prices, showing a clear divergence in trends.

During the week, refineries actively lowered ex-factory prices to exchange price for volume and reduce inventory. As toluene prices fell below 6,500 yuan/ton, market interest in low-level replenishment increased. Meanwhile, toluene export negotiations rose during the week, with some export replenishment further improving the sales performance of Shandong refineries. Corporate auctions continued to command premiums, consuming high inventories.

2. Spread Between Toluene and Pure Benzene Widens

This week, the average spread between pure benzene and toluene in Shandong was 1,863 yuan/ton, with HDA process processing profit at 1,049 yuan/ton. Last week, the average spread between pure benzene and toluene in Shandong was 1,281 yuan/ton, with HDA processing profit at 470 yuan/ton. As of the close on April 23, the monitored HDA process processing profit was 1,104 yuan/ton, recording the highest single-day profit value since 2025.

Currently, crude oil prices remain high, providing good support for aromatics product costs. However, only the HDA industry is engaging in essential procurement, failing to attract operations from the disproportionation industry.

3. Spread Between Xylene and Toluene Widens but Remains Negative

During the week, the average spread between xylene and toluene in Shandong was -35 yuan/ton, with toluene refineries averaging a production-to-sales ratio of 123%. Last week, the average spread between xylene and toluene in Shandong was -260 yuan/ton, with toluene refineries averaging a production-to-sales ratio of 108%. Within the week, news of PX companies' planned early shutdowns for maintenance was denied, and the spread between PX and MX widened to a high level. Downstream PX companies gradually entered the market for procurement, causing MX prices to bottom out and rebound phase-wise. Refinery auctions continued to command premiums, with smooth sales. Affected by this, the spread between xylene and toluene widened, returning to positive territory.

Due to high gasoline enterprise inventories and weak end-user demand, the decline in toluene prices has still failed to stimulate procurement from the gasoline industry.

Specifically, at Thursday's close, the spread between xylene and toluene was 65 yuan/ton, widening by 665 yuan/ton from the low point.

4. Market Outlook

Positive factors: Severe losses in reforming units, good cost-side support; export window opened.

Negative factors: Gasoline consumption is very limited.

Recently, low toluene prices have attracted operations from downstream sectors and intermediate traders. With the export window open, trading activity in the Shandong toluene market has improved significantly, and refinery auctions have continued to command premiums. In the near term, there is no significant change in regional supply; the main variable lies in the delivery status of export orders. Although the gasoline industry has seen improved trading recently, its interest in toluene remains limited. As the May Day holiday approaches, expectations for companies to clear inventories persist, so refineries remain cautious about raising prices. Toluene prices are expected to strengthen slightly in the near term.