Toluene and MX prices decline to year-to-date low

As of Sep 2024, China toluene and mixed xylenes price hiked before pulling back this year. After the price slump in Aug, the prices plunged again in the first week of Sep, recording a bigger drop than that throughout Aug. The consumption and investment peak in Sep and Oct did not live up to expectation.

As of Sep 10, East China toluene price declined from 7360yuan/mt in the beginning of Aug to 6100yuan/mt, down by 17.1%; and that of MX from 7610yuan/mt to 6180yuan/mt, down by 18.8% over the same period. Such whopping price drop during this period has been rarely seen in previous year.

Firstly, crude oil and Asian toluene and MX prices fell rapidly.

Crude oil price fell persistently, weighing on toluene and MX prices. Refined oil blending demand was sluggish from Asia and the US, and thus FOB Korea toluene and MX markets lost the driving force. Blending demand from the US had already shown a sign of weakening in Jun and Jul. The arbitrage window for toluene and MX from South Korea to US was shut. In addition, local demand in Asia was slack in Jul and Aug, but some refineries restarted their plants after the maintenance earlier.

Secondly, China received large amounts of MX imports, and the inventory increased.

In Jul, the arbitrage window for MX imports from South Korea to China opened, with price spread turning to positive. Orders were concluded intensively, and cargoes kept arriving at China in mid and late Aug. In Sep, the import volume is anticipated to remain large, and domestic supply is also expected to increase with Sinopec Guangzhou and Binzhou Youtai restarting their plants in Aug.

As a result, tank inventory of MX at coastal regions increased obviously from 27kt in mid-Aug to 57kt in early Sep.

Thirdly, demand was sluggish.

Demand for blending component was slack in Aug. The sales to production ratio of toluene and MX was below 100% in Shandong. Recently, offtake of MX at East China was fast, mainly because after the price slump in East China, materials flowed to Shandong market. Then, local sales at Shandong weakened.

As for demand from PX, though PX-MX price spread widened from Jul, PX producers did not increase the buying of MX. As benzene price was more resilient, plants preferred to buy toluene, attracted by good TDP profits.

In a conclusion, toluene and MX are in the lack of advancing momentum. The prices decline to this year's new low amid increasing supply coupled with weak demand. In the future, Asian toluene and MX price are anticipated to further drop as blending demand is weak.