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Sluggish demand Affects the Price of Toluene in the USA and European market

Sluggish demand Affects the Price of Toluene in the USA and European market

Sluggish demand Affects the Price of Toluene in the USA and European market

  • 28-Jul-2022 3:49 PM
  • Journalist: Nicholas Seifield

Houston, USA: Toluene prices in the US have declined in the backdrop of rising inventories and limited demand from downstream industry. In addition, the decreasing Euro values and the growing speculation of recession support the price fall in the domestic market. Besides, the bearish demand from the domestic and international markets has other facets for the price decrease.

Prices of Toluene have dropped by 1.2% in the German market during the week ending July 22nd 2022. Since the beginning of July, the European market has been observing a fall in the Euro against the USD dollar. The growing speculation around a European recession and the high inflation rate has been altering the European economy and causing the plunge in Euro. This condition is worsening the prices of several commodities, including petrochemicals. Thus, the scenario mentioned above has resulted in the tumbling price trend of Toluene in the domestic market.

Despite the relatively tight supply of upstream Crude oil, the price of Brent Crude oil is declining in the German market amidst weak buying sentiments. The Brent crude oil prices hovered around USD 100/barre; hence, the dropping upstream crude oil price negatively impacts the Toluene prices. Consequently, the prices of Toluene in the German market were quoted at Euro 1616/Tonne during Mid-July.

Additionally, the demand for Toluene from the downstream derivative Toluene diisocyanate, Benzoic acid, and Benzyl chloride is falling, further pulling down the Toluene costs. On the other hand, the muted demand from downstream solvent and construction industries led to weak buying sentiments; hence the manufacturers have been prompted to decline their offers and sell off the stockpiled commodities.

Similarly, manufacturing activity has contracted in the USA market, and PMI shifted to the lowest level compared with the previous month. Also, the speculations around a US recession have intensified in the last couple of months, dampening consumer sentiment. Most buyers fled to the side-line for a wait-and-see attitude and only purchased on a need-to basis. As a result, US Toluene prices were assessed at USD 1770/Tonne with a weekly declination of around 4.6% on July 22nd 2022.

As per ChemAnalyst, “the Toluene price may shift balance in the European and the USA market in the coming months. Furthermore, demand for Toluene and its derivatives in the construction industries might improve across the US and European markets. In addition, the delay in gas supply might result in the shutdown of certain petrochemical manufacturing plants, which can lead to a tight supply of the product in the market. The upstream crude oil prices may further show volatility, which will likely impact feedstock Xylene and Benzene prices in the regional market.”

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