Houston- Toluene prices in the US market remained stable in the second week of February as Toluene manufacturers focused on balancing the gap between demand and supply in the domestic market. Toluene production costs are directly proportional to the total cost of naphtha and crude oil prices in the domestic market. For the past two months, the global market has been in turmoil regarding crude oil prices, with significant variations impacting the final prices of Toluene. At the week ending February 19th, Toluene prices in the US market were observed at USD 1145 per MT, FOB Louisiana, maintaining steadiness from the previous week.

Low levels of inventory are maintaining the advantage for sellers in the housing market. While mortgage rates have decreased from their highest point, they remain elevated, and expensive home prices are deterring potential buyers. Further drops in rates would stimulate activity from both buyers and sellers. However, with home prices at historically high levels and inventory remaining scarce, numerous potential sellers and prospective buyers are experiencing apprehension regarding the current state of the housing market.

Despite the escalation of the war and its impact on neighboring nations, oil prices remained relatively stable within a certain range. Analysts suggested that only a tangible supply interruption would prompt traders to consider geopolitical risks. The primary reason for this stability was the significant increase in U.S. oil production, which unexpectedly surged the previous year. Many traders and analysts expect a continuation of this trend into the current year.

Despite ongoing disruptions in shipping through the Suez Canal due to volatility in the Red Sea, U.S. retailers have increased their projections for import growth in the first half of 2024. This optimism comes despite the doubling of shipping rates in 2022, partly influenced by the Federal Reserve's efforts to combat inflation, which have kept rates elevated. Although the Federal Reserve does not directly control mortgage rates, mortgage lenders often adjust rates in response to the Fed's series of rate hikes, leading to a parallel increase in mortgage rates.

Toluene prices are significantly affected by several factors, including slow to moderate demand forecasts from various manufacturing sectors like Toluene Diisocyanate, coatings, adhesives, and solvent industries. Moreover, disruptions in price dynamics have occurred due to geopolitical tensions and conflicts along the Red Sea, a vital trade route. Retailers and buyers of Toluene are holding back on placing larger orders due to these uncertainties. These factors are anticipated to be reflected in the final selling prices of Toluene in the US market. According to ChemAnalyst, Toluene prices in the US market are expected to remain steady in the coming week, influenced by rising inflation rates and significant production costs domestically.