China toluene exports spurred by gasoline blending demand

China's toluene imports have been decreasing in recent years, while the exports has increased year by year since 2018. In 2022, in particular, toluene exports rose to record high of 650kt throughout the year.

During Jan-Jul 2023, China toluene exports amounted to 170.3kt, compared to 340.1kt during the same period of last year. In 2022, Asian toluene exports were driven up sharply, due to robust gasoline blending demand in the US.

However, the frenzy of exports from Asia to the US did not repeat before Jul this year, yet the exports indeed increased in Jul 2023 as gasoline demand was strong. Mogas 92 price continued rising in Singapore, with large requirements for blending components from China. However, China did not issue the third batch of refined oil export quota until early Sep, and therefore, several traders and producers based in China were discussing toluene exports with foreign buyers in Aug. It is estimated that China toluene exports in Aug and Sep could further increase, but it could still not reach the high in last year.

In terms of gasoline exports from China, it reached 1.22 million tons in Jul 2023, up 28.4% on month and up 38.6% on year.

Singapore accounted for the largest part, receiving 885kt of gasoline from China, taking up 72.35% in Jul. Gasoline price has been rising since Jul, and the arbitrage spread for gasoline from China to Singapore is wide, driving up the exports to Singapore.

In a conclusion, China toluene import and export structure is altering in recent years. Toluene exports increase due to gasoline blending demand outside China. In Sep, refined oil exports and discussions for toluene exports should be watched closely.