From October 8th to 29th, the domestic toluene market first rose and then fell, fluctuating within a certain range. On October 8th at the beginning of the month, the average market price was 8706.67 yuan/ton, and on October 29th at the end of the month, the average price was 8783.33 yuan/ton, an increase of 0.88% for the whole month, with limited overall fluctuation.
During the cycle, international crude oil prices have risen in stages, driving the strong night market for aromatic hydrocarbons. Petrochemical companies and traders holding goods have a positive attitude towards trading, indicating an intention to push up prices. However, downstream profits continue to be weak, and terminal factories and traders are more cautious about receiving goods from high-level sources. On site transactions are mainly based on small orders for essential needs, and there is a scarcity of concentrated inventory replenishment. As the end of the month approaches, the centralized delivery of paper goods that supported the port premium is gradually coming to an end. The premium support brought by contracts is fading, and the rational decline of port spot premiums has led to a pressure drop after the market surged. This cycle, the toluene market presents a pattern of cost expectation bottoming out, continuous demand constraint, and end of month paper goods disturbance. The long short game is deadlocked, and it is difficult to break out of a unilateral trend market.
Cost aspect:
The cost side of toluene follows the linkage operation of crude oil and naphtha, and the trend of crude oil is the core guidance of the current market. Within the monitoring range, crude oil showed a pulse like upward trend, driving up the price of naphtha. The aromatic hydrocarbon sector also strengthened in sync, providing support for the spot price of toluene in terms of cost expectations. This was also the main basis for the price increase of holders at the beginning of the month. However, the sustained rise in crude oil prices is not strong, and after the rise, it quickly turns into volatility, with significant fluctuations in cost support. During the oil price correction phase, the aromatic hydrocarbon market weakened, leading to a rapid cooling of market sentiment and pressure on spot prices. This was also an important factor in the month end price drop. The intermittent manifestation of cost support can only bring temporary boost, and it is difficult to drive the continuous upward trend of toluene prices. As of October 28th, the settlement price of the December contract for WTI crude oil futures in the United States was $102.78 per barrel. The settlement price of Brent crude oil futures for January contract is $111.64 per barrel.
Supply side:
The overall operation of domestic toluene refining plants is stable, with few centralized maintenance, and the industry’s operating load remains stable. The production of domestic commodity toluene has not changed much. The external cargo has arrived at the port as planned, and the supply of goods from the main ports in East China is orderly. The overall spot supply is sufficient, and there is no obvious shortage of goods. During the cycle, paper goods trading was active, with contract buying orders concentrated in the market before delivery, temporarily pushing up the port spot premium and helping to boost the market at the beginning of the month; The delivery of paper goods at the end of the month has been completed one after another, and contract buying orders have left. The additional benefits brought by funds have faded, and the port premium has gradually returned to a reasonable range, weakening the positive support. The port inventory remains at a neutral level without a continuous trend of destocking, making it difficult for the supply side to form sustained positive support.
Demand side:
The PX market has been fluctuating in this cycle, with average profit transmission between the PX and PTA industry chains, insufficient follow-up of downstream polyester orders, and limited upward space for PX prices. The processing income of the disproportionation device fluctuates with the market, and the processing price difference is still acceptable. The enterprise maintains normal feeding; When the price difference narrows, the pace of toluene procurement slows down, with on-demand procurement being the main focus, and the procurement volume does not continue to increase. The PX market trend follows the fluctuations of the polyester end, and the market lacks sustained upward momentum, which has limited driving effect on toluene procurement.
Except for the production of PX through disproportionation, the downstream of toluene includes solvents TDI、 The profitability of downstream industries such as benzoic acid and nitrotoluene is generally under pressure, and the continuous increase in raw material prices is squeezing the profits of finished products. Many facilities are in a low profit or even loss making state. Affected by profitability, downstream enterprises have low purchasing enthusiasm and generally adopt a strategy of purchasing as needed. They lack the willingness to actively replenish inventory and have obvious resistance to high-level sources of goods. The market inquiry atmosphere is flat. Although the continuous existence of rigid demand transactions provides a certain bottom line for prices and limits the deep decline of the market, the lack of incremental order driving makes it difficult to sustain price increases, resulting in a market with temporary prices but no market.
Market forecast:
The fluctuation of crude oil prices is highly uncertain, and the cost support of toluene will continue to fluctuate. On the supply side, there is currently no large-scale maintenance plan for domestic refineries, and the supply of goods from ports to ships is stable. The spot supply remains loose, making it difficult for the supply side to have strong profits to release. On the demand side, the pace of repairing the PX and polyester industry chains is slow, and there is limited room for improvement in the price difference of disproportionation processing; Downstream profits such as solvents and TDI are unlikely to show significant improvement in the short term, and the cautious attitude of buying goods at high prices is difficult to change in the short term, resulting in weak expectations for incremental demand. Based on comprehensive fundamental analysis, the stalemate between long and short positions in the toluene market continues, with phased cost support and weak demand suppression coexisting. It is expected that the toluene market will maintain a high volatility trend, with limited upward space. At the same time, the cost support brought by crude oil will also limit the deep pullback. Focus on the trend of crude oil, changes in port inventory, PX market, operation of disproportionation units, and other downstream profit and operating load changes in the future.
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