The US Market Continues to Witness Steadiness in the Toluene Prices

Louisiana (USA): The Toluene prices in the North American region witnessed stability amidst the continuous rise in the WTI crude oil and naphtha prices in the regional market. Toluene manufacturers are working to balance the demand and supply of Toluene in the domestic market. The cost of producing Toluene is directly influenced by the combined costs of naphtha and crude oil in the local market. Over the past two months, the global market has experienced turmoil in crude oil prices, leading to fluctuations in naphtha prices and significantly impacting the final prices of Toluene.

As of the week ending March 1^st 2024 Toluene prices in the US market remained steady at USD 1155 per metric ton, free on board (FOB) Louisiana, compared to the previous week.

The decision to extend production cuts until mid-2024 builds upon previous reductions in oil output and exports, as major energy producers aim to increase market prices. The energy ministry of Saudi Arabia intends to decrease production in the second quarter, and Russia has also announced cuts for the global market during this period. These supplementary reductions will be gradually reversed depending on market conditions to maintain stability.

A market insider noted that certain manufacturers were raising prices for solvent Toluene. This trend could continue due to the approaching blending season and the expected increase in demand. Currently, demand seemed steady, and there were no market shifts concerning imports from Europe. Meanwhile, in Europe, the availability of solvent Toluene tightened during the week due to ongoing exports to the US, leading to low operation rates as reported by market sources.

Oil prices rose and this increase was fuelled by a smaller-than-anticipated rise in US crude inventories, significant withdrawals from distillate and gasoline stockpiles, and comments from the US Federal Reserve indicating his expectation of interest rate cuts in the US this year. Market participant's remarks suggest that lower interest rates could stimulate economic growth, potentially increasing the demand for oil and raising the production cost of Toluene.

The regional manufacturing surveys, conducted by the Federal Reserve showed that manufacturing activity remained relatively unchanged till mid Q1 of 2024. However, there was a slight improvement in expectations for future business conditions, and employment numbers saw a slight increase. New Toluene orders and backlogs decreased, as did production and employment. Both exports and imports expanded, and there was a slowdown in supplier deliveries. ChemAnalyst predicts that Toluene prices in the US market may pick up the pace in the upcoming week. This forecast is attributed to increasing inflation rates and substantial domestic Toluene production costs.