European Toluene Prices Drops and stumbles in the first week of May 2024
European Toluene Prices Drops and stumbles in the first week of May 2024

European Toluene Prices Drops and stumbles in the first week of May 2024

  • 08-May-2024 3:13 PM
  • Journalist: Motoki Sasaki

Hamburg (Germany): In early May 2024, Toluene prices in Europe fell due to ample domestic supply and steady demand from manufacturing. The surplus production in the region led to a gap between supply and demand for benzene. Toluene manufacturers are working to balance supply and demand in the domestic market. Toluene production costs are closely linked to naphtha and crude oil prices, both of which have been volatile globally in recent months, impacting Toluene prices significantly.

The European steel market in 2024 is facing ongoing challenges, as reported by the European Steel Association (EUROFER). Factors such as geopolitical tensions, economic uncertainty, energy prices, inflation, and interest rates are contributing to a difficult outlook. EUROFER emphasizes the need for a strong business case in Europe to facilitate a successful transition, supported by conditions such as competitive clean energy, fair trade measures, funding support, and markets for green products. The construction sector in Europe is experiencing another challenging year, with a decrease in building permits issued and high building costs significantly impacting the Toluene demand outlook.

In April, manufacturing activity in the euro zone faced a worsening downturn, as demand declined despite factories reducing prices. This led firms to cut their workforce again, according to a survey. The situation varied across the region, with conditions deteriorating in France and Italy, while Germany's manufacturing sector edged closer to expansion. Spain, however, stood out, with activity expanding at its fastest pace in nearly two years, driven by an increase in demand.

The overall production cost of Toluene also depends on the crude oil cost and the availability in the domestic market. Saudi Arabia increased its official selling prices (OSPs) for crude oil sold to Asia, Northwest Europe, and the Mediterranean in June, indicating expectations of robust summer demand. This decision followed Saudi Arabia's move to raise June OSPs for most regions, reflecting a tightening of supplies in the current quarter. Additionally, there are expectations of decreased European demand for products like polymers, petrochemicals, and benzene derivatives, as the European Central Bank and the Bank of England have raised interest rates to counter inflation, which could lead to slower economic growth.

ChemAnalyst forecasts that Toluene prices in the European market may continue to remain steady in the upcoming week, citing a decline in new orders and backlogs. The report also notes increases in both exports and imports, along with a slowdown in supplier Toluene deliveries. These trends are attributed to rising inflation rates and high domestic production costs for Toluene.

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