For the Quarter Ending September 2024
North America
The Toluene pricing landscape in North America during the third quarter of 2024 witnessed a significant decline, with prices dropping by 25% compared to the same quarter last year. In the USA, where the most pronounced price changes were observed, the market experienced a negative trend throughout the quarter.
Various factors contributed to this downturn. Market uncertainties, reduced demand from key sectors like polyurethane and TDI, and supply chain disruptions locally and globally played pivotal roles in shaping the pricing environment. Additionally, the correlation between crude oil prices, naphtha volatility, and economic indicators further exacerbated the downward pressure on Toluene prices.
At the same time, OPEC's declining influence on global crude oil markets shifted focus to U.S. economic data, raising concerns about market instability. Compounding the challenges, chemical plants like ExxonMobil Corporation in Louisiana were shut down due to force majeure, while others implemented precautionary measures as Hurricane Francine, then classified as a Category 2 storm, approached for landfall.
APAC
Toluene prices in Asian market remained stable and favorable, supported by weak demand for styrene and other aromatic solvents in both domestic and international markets. The situation highlighted the necessity of closely monitoring market conditions and adjusting production strategies accordingly. Companies had to adopt a strategic approach to inventory management and production scheduling to effectively navigate the market landscape. This decline, driven by lower crude oil prices and reduced demand from the petrochemical sector, provided temporary relief to toluene producers amid persistent challenges in downstream markets. Adding to these facets, the Asian market witness temporary plant shutdown such as Lotte Chemicals (South Korea), Petrochemical Corporation of Singapore, CPC Corporation (Taiwan) impacting the overall capacity volume throughput the quarter in the Asian market. The macroeconomic environment further contributed to a bearish market atmosphere, resulting in limited trading and low market activity. Despite some regions expressing interest in replenishing inventories, overall demand remained weak, offering insufficient support for prices. A "container crisis" emerged in the shipping and logistics sector due to China's surplus production and the rush to export excess inventory at discounted prices.
Europe
Throughout Q3 2024, Toluene prices in the European region experienced a significant decline, with the Netherlands witnessing the most substantial price changes. This downward trend was primarily influenced by reduced demand from downstream sectors, particularly toluene diisocyanate (TDI). The surplus of toluene in the market due to decreased TDI demand and tightening within the construction sector were key factors contributing to the price drop. Additionally, the costs of naphtha and energy required for production played a role in driving prices down. The overall sluggish demand outlook, alongside elevated production costs, further compounded the negative pricing environment. Compared to the same quarter last year, Toluene prices in Q3 2024 saw a significant decrease of 22%. The European construction sector remained in a deep slump by the middle of the third quarter, with activity declining at an accelerated rate, largely due to significant weakness in the housing market, although civil engineering demonstrated some resilience. Job losses worsened, even though the decline in new orders slowed slightly and firms showed less pessimism about the outlook for the upcoming year. Price pressures across the construction sector eased, driven by a fifth consecutive monthly drop in purchasing costs and a renewed decline in subcontractor rates.
MEA
The third quarter of 2024 presented a difficult phase for Toluene prices in the MEA region, with prices undergoing a notable decline. Several factors contributed to this downward trend, including weakened demand from core sectors like toluene diisocyanate, paints, and construction. In addition to this, port congestion across the Middle East and Asia, combined with an imbalance in container repositioning, worsened the situation by creating a surplus of empty containers. These logistical challenges disrupted supply chains and applied further pressure on market prices. In Saudi Arabia, these factors had a particularly pronounced impact, causing the market to experience the most significant price changes. Toluene prices across the region exhibited a consistent downward trend, with a notable -17% shift compared to the same quarter the previous year. The primary cause of the decline in Toluene prices was the weakening demand from industries like toluene diisocyanate, paints, and construction. The situation was further exacerbated by persistent port congestion and poor container repositioning management, leading to a surplus of empty containers.
For the Quarter Ending June 2024
North America
In Q2 2024, the North American toluene market experienced a pronounced decline in pricing, influenced by a confluence of factors. Predominantly, weak derivative demand and decreasing production costs have been pivotal in driving down prices. The market was further destabilized by volatile crude oil futures and consistent reductions in feedstock prices. Despite significantly curtailed production rates due to overarching market uncertainty, the supply of toluene continued to outpace downstream demand.
The limited cost support from falling feedstock naphtha prices exacerbated a bearish market sentiment among manufacturers. Additionally, lower operational rates and contractive manufacturing activity added to the pricing pressure. Focusing on the USA, which witnessed the most substantial price fluctuations, the overall trend was distinctly downward. Seasonality did not provide the typical uplift, and the consistent decline was evident in the correlation between market dynamics and pricing trends.
Compared to the same quarter last year, toluene prices have decreased by 9%, reflecting a significant contraction. From the previous quarter in 2024, the prices dropped by 2%, underscoring a persistent downward trajectory. Concluding the quarter, toluene prices stood at USD 1037/MT FOB Louisiana, illustrating a predominantly negative pricing environment throughout Q2.
APAC
The Toluene market in the APAC region experienced mixed market dynamics in Q2 owing to the various factors in the market. In the first half of the quarter, the market faced subdued demand from end-use sectors such as paints, coatings, and solvents. The ongoing decline in naphtha prices, a crucial feedstock, exacerbated this downward trend, directly impacting the production costs of Toluene. The volatile geopolitical landscape, particularly with OPEC's fluctuating oil production decisions, further influenced market dynamics by adding uncertainty to crude oil and naphtha pricing. On the other hand, the toluene prices rebounded as the tight supply of toluene in South Korea had led to price hikes, driven by GS Caltex's maintenance. Market players kept prices high and reduced stockpiles due to rising demand.
Additionally, oversupply concerns persisted, driven by ample stockpile availability across the region, leading market participants to adopt a cautious approach. South Korea, in particular, witnessed the most significant price changes, reflecting broader market trends and seasonal variations.
The price comparison between the first and second half of the quarter revealed a further decline of 3%, indicating a steady downward trajectory throughout Q2. The latest quarter-ending price for Toluene in South Korea was recorded at USD 886/MT CFR Busan, encapsulating the overall bearish sentiment. The pricing environment throughout the quarter showcased variations as the increased freight charges, tight supply chain, and demand outlook impacted the final prices of toluene in the regional market.
Europe
In Q2 2024, the European market for toluene experienced a drastic decrease in prices, reflecting a bearish sentiment throughout the quarter. The primary factors influencing this decline included ample domestic supply, weakened demand from downstream industries, and the volatile global prices of naphtha and crude oil. The oversupply of toluene, coupled with steady but not robust demand, created a supply-demand imbalance that exerted downward pressure on prices. Additionally, macroeconomic factors such as rising interest rates, inflation, and economic stagnation across Europe further constrained demand, particularly from the construction, automotive, and manufacturing sectors that consume toluene and its derivatives like toluene diisocyanate.
Focusing specifically on Germany, which saw the most pronounced price fluctuations, the overall trend was negative, exacerbated by seasonal factors. The decline in car sales and reduced consumption of polyurethane foams in the automotive industry, along with fewer public construction projects, contributed to the demand shortfall. Seasonal trends, typically involving higher activity in the warmer months, failed to materialize, and increased rainfall disrupted transport routes, further aggravating the situation. Prices in Germany declined by 5% compared to Q2 2023, reflecting a substantial year-over-year reduction. Despite a brief recovery in Q1 2024, which saw a 7% price increase from the previous quarter, the overall sentiment in Q2 was overwhelmingly negative. The price comparison between the first and second half of the quarter revealed a sharp decline of 13%, culminating in a quarter-ending price of USD 995/MT, FD Hamburg for toluene.
The consistent decrease in toluene prices in Europe during Q2 2024 highlights a challenging pricing environment, heavily influenced by both internal supply-demand dynamics and external economic pressures, leading to a predominantly negative market sentiment.
MEA
In Q2 2024, the Toluene market in the MEA region experienced a notable decline in prices, driven by a confluence of factors that exerted downward pressure on the market. Primarily, the global oversupply of key raw materials and the persistent reduction in naphtha prices, a critical component for Toluene production, significantly influenced market dynamics. Additionally, the escalation in freight charges and the tightening of the shipping container trading market exacerbated logistical costs, further impacting price calculations unfavorably. Geopolitical tensions, leading to prolonged shipping routes and increased operational costs, also played a pivotal role in shaping the price trajectory.
Focusing on Saudi Arabia, which witnessed the most pronounced price changes, the overall trend in the Toluene market was notably bearish. Seasonal factors such as decreased demand for heating fuels as Asia transitioned from winter to summer contributed to the softened demand. The overall price adjustment saw a 2% decline compared to the same quarter last year and a 3% reduction from the previous quarter in 2024. The latter part of the quarter reflected a steeper decline of 10% compared to the first half, indicating a deepening bearish sentiment in the market.
Concluding the quarter, the price of Toluene in Saudi Arabia settled at USD 1195/MT CFR-AL Jubail, reflecting a persistently negative pricing environment throughout the period. This consistent downward trend underpinned by multiple economic and logistical pressures emphasized the challenges faced by the market, marking Q2 2024 as a period of significant price erosion for Toluene in the MEA region.
For the Quarter Ending March 2024
North America
In Q1 2024, toluene prices in the North American region witnessed a price hike. Inflationary pressures had heightened as the costs of materials like metals and plastics from suppliers, along with increased transportation charges, rose more sharply. In response to OPEC's supply cuts, the Americas, particularly the United States, had increased their supply.
Additionally, oil traders were closely monitoring efforts to negotiate a ceasefire in Gaza and any signs of increased U.S. military involvement in the Middle East. The United Nations trade body had cautioned that escalating attacks on vessels in the Red Sea were exacerbating challenges for shipping routes already affected by conflicts and climate-related issues. The combination of incidents in the Red Sea, geopolitical tensions impacting Black Sea shipping, and the effects of climate change on the Panama Canal had resulted in a complex crisis affecting crucial trade routes.
The demand outlook for toluene and other aromatics had remained strong, with the repercussions reflected in domestic market toluene prices. The improvement had been broad-based, with both the manufacturing and service sectors experiencing accelerated growth. The number of sub-sectors expanding had reached a ten-month high. Manufacturing output had increased notably for the second consecutive month, driven by a renewed rise in new orders for goods.
APAC
During Q1 2024, toluene prices in the APAC region exhibited an overall upward trend, influenced by several factors. Industries such as paints, coatings, solvents, and downstream petrochemicals maintained steady demand, pushing toluene prices higher. Moreover, ongoing construction projects in the region contributed to the increased demand for toluene, further boosting prices. In South Korea, toluene prices experienced significant changes, with a 10% increase compared to the previous quarter in 2024. However, prices decreased by 7% compared to the same quarter last year. Within the quarter, prices rose by 2% from the first half to the second half. By the end of the quarter, the price of toluene CFR Busan in South Korea was USD 860/MT. The pricing trend for toluene in South Korea was positive, with prices consistently rising throughout the quarter. Overall, the APAC region witnessed a positive sentiment in toluene prices for Q1 2024, driven by stable demand from various industries and construction activities.
MEA
Toluene prices in the Middle East and Africa (MEA) region had experienced a significant increase in the first quarter of 2024. This upward trend can be attributed to several factors that have influenced market prices. Firstly, there has been a strong demand for toluene from various industries such as solvents, toluene diisocyanate, and aromatics. This increased demand has put upward pressure on prices. Additionally, supply constraints have played a role in driving up prices. There have been reports of insufficient inventories and limited import volumes, which have created a supply-demand imbalance in the market. As a result, prices have risen to ensure an adequate supply of toluene. Saudi Arabia has seen the maximum price changes in the region. The country's toluene prices have increased by 25% compared to the same quarter last year. The price change from the previous quarter in 2024 was recorded at 9%, indicating a continuous upward trend. Furthermore, there has been a notable price difference between the first and second half of the quarter, with prices increasing by 19%. This suggests that the pricing environment has been positive, with prices consistently rising throughout the quarter. In conclusion, the first quarter of 2024 has been marked by increasing toluene prices in the MEA region. Factors such as strong demand, supply constraints, and price differentials have contributed to this upward trend. The latest quarter-ending price for toluene in Saudi Arabia was recorded at USD 1405 per metric ton, CFR-AL Jubail.
Europe
In Q1 2024, the European toluene market experienced a quarter characterized by complex interplays of supply chain adjustments, geopolitical uncertainties, and economic factors influencing both production costs and market demand. Stockpile availability remained ample across the region, providing some stability against fluctuating import flows and manufacturing demands. This period saw a sustained demand from key end-use sectors such as TDI and other solvent industries, which, while steady, did not lead to significant price hikes due to the balancing effect of sufficient inventories.
Throughout the quarter, European countries continued adjusting their import strategies in response to decreased inflows from the East of Suez, increasingly turning to US imports to ensure supply continuity. This shift was part of a broader strategic realignment in response to ongoing geopolitical tensions in the Middle East, which slightly elevated oil prices and indirectly influenced toluene's production costs.
Rising naphtha prices posed a continuous challenge, increasing production costs for toluene manufacturers and adding pressure to maintain profitability without escalating market prices unduly. This situation was further complicated by impending refinery maintenance across Europe, threatening to tighten toluene supplies and necessitate careful logistical planning and inventory management.
Despite these challenges, the European toluene market managed to avoid drastic fluctuations in supply and demand, thanks in part to manufacturers' adept handling of production costs and supply chain dynamics. The quarter was marked by a cautious optimism, with industry players navigating economic uncertainties and supply risks without severe market disruptions, underscoring the resilience and strategic adaptability of the European chemical sector.
For the Quarter Ending December 2023
North America
In Q4 of 2023, the North American Toluene market plunged owing to several challenges. Firstly, crude oil prices declined due to geopolitical tension between Hamas and Israel and the Federal Reserve's high-interest rates towards the quarter's end. Secondly, the strength of the US dollar against the Euro reduced exports to European countries like the Netherlands.
Additionally, there was a lack of demand from downstream industries such as paint, coating, and solvent, although demand remained relatively steady despite seasonal fluctuations. The USA faced inventory pressure as upstream stocks declined to two-year low levels, and no plant shutdowns were reported during this period. The already bearish market conditions were intensified by seasonally low demand for naphtha, resulting in the lowest cash prices for heavy virgin naphtha (HVN) at the US Gulf coast in a year.
Additionally, weak gasoline pricing further contributed to the overall negative sentiment. The Texas-Mexico crossing resumed operations; however, manufacturers kept a close eye on the market and demand volume before considering any variations in prices. These factors contributed to the quarter-ending price of USD 1024/MT of Toluene FOB Louisiana in the USA.
APAC
In Q4 2023, toluene prices in the APAC region underwent a bearish trend influenced by various factors. Initially, lower production rates and a diminished demand outlook from downstream industries such as TDI, coatings, and adhesives were observed as the quarter came to a close. Additionally, the supply of toluene remained moderate in the region, with domestic refineries maintaining optimal production rates. The demand outlook from downstream industries like paints, coatings, and solvent manufacturing also remained sluggish during this period. South Korea experienced significant price changes, primarily due to moderate supply and low demand from industries such as paints and coatings. Toluene prices in South Korea exhibited a 2% downward trend from the previous quarter, with a price change of -18% for the first and second halves of the quarter. Notably, no plant shutdowns were reported in the region during the quarter. The quarter-end price for toluene CFR Busan in South Korea was recorded at USD 798/MT. In summary, toluene prices in the APAC region were impacted by the global economic slowdown, seasonal winter conditions, and limited market activity, resulting in a bearish trend.
Europe
In Q4 2023, toluene prices in the European region moved southwards and were influenced by various factors, resulting in a bearish quarter characterized by moderate supply and demand. The decline in production was attributed to reduced activities in manufacturing consumer goods and intermediaries. Throughout the quarter, downstream sectors such as TDI, coatings, and adhesives experienced weak demand. The quarter-end saw lower production rates and a diminished demand outlook specifically from TDI, coatings, and adhesives. Trading activity was restricted, and apprehensions regarding supply disruptions in the Red Sea were diminishing. The disruptions had elevated rates, and their influence was anticipated to extend into January. Nevertheless, the presence of the US carrier group was expected to restore normalcy soon. Meanwhile, diesel shipments to Europe from the Middle East Gulf were slowing down, leading Europe to seek diesel from the US. However, this transition was constrained by the elevated US-Europe MR freight rates. The latest recorded price of Toluene FD Antwerp, Belgium, in Q4 2023 was USD 976/MT.
MEA
In Q4 2023, toluene prices in the MEA region remained bearish, primarily attributed to weak demand from end-use sectors such as adhesives, disinfectants, and toluene diisocyanate. The resultant decrease in demand led to a buildup of inventories, exerting additional pressure on prices. Saudi Arabia, in particular, witnessed a continuous drop in toluene prices due to soft buying interest and escalating inventories. Demand from downstream industries like coatings and solvents remained sluggish. The oversupply of toluene, driven by increased imports from low-priced countries like China, contributed to the overall decline in prices. High inventory levels in Saudi Arabia further intensified the downward pressure on prices, with no major plant shutdowns reported during the quarter. The disturbance in the Red Sea might not have a substantial impact on crude and liquefied natural gas (LNG) prices, the redirection of oil shipments could potentially influence spot crude prices. OPEC's primary objective is to optimize revenue from oil exports, a pursuit that occasionally conflicts with the interests of nations reliant on oil imports. Striking a balance between maintaining elevated oil prices, ensuring global economic stability, and contending with non-OPEC producers poses challenges for the organization. The latest recorded price of Toluene CFR-AL Jubail in Saudi Arabia during Q4 2023 was USD 1156/MT.
