US Toluene Prices continued to Decline Amid Weak Volume Offtakes
US Toluene Prices continued to Decline Amid Weak Volume Offtakes

US Toluene Prices continued to Decline Amid Weak Volume Offtakes

  • 27-Jun-2024 5:19 PM
  • Journalist: Shiba Teramoto

Texas (USA): In the US market, Toluene prices have continued to decline due to a drop in overall domestic demand. The value of Toluene closely correlates with demand from downstream and derivative manufacturing sectors. The naphtha prices in the US market remained on the lower side of the price range proportionally impacting the production cost, creating a balance between the demand and supply of Toluene in the domestic market. These factors combined to lower Toluene prices in the US market, which settled at USD 998 per MT, FOB Texas, in the third week of June.

According to The American Petroleum Institute (API), crude oil inventories in the United States rose by 2.264 million barrels. In the previous week, API reported a decrease of 2.428 million barrels in crude inventories.

Looking ahead to 2024, the US industrial market is expected to stabilize with net absorption matching 2023 levels and rent growth moderating to 8%. Construction and paints industries which requires Toluene as one of the major solvents, is forecasted to decline by midyear, reaching half of the total seen in 2023. Early-year new developments may temporarily raise the overall vacancy rate to approximately the 10-year average of 5.0%, before a slight decrease in the latter part of the year. Economic uncertainties, tight lending conditions, and an oversupply of large warehouse facilities in certain regions are anticipated to keep new development subdued in the foreseeable future.

Meanwhile, Tropical Storm Alberto, the first named storm of the 2024 Atlantic hurricane season, is currently approaching the coast of Mexico. The storm has already caused flooding in some coastal communities in Texas due to a combination of storm surge and high tides. In the chemical market, the trend in Toluene, Toluene diisocyante (TDI) prices has been bearish, with producers reducing quotations during the week amid weak demand and higher inventory levels. However, supply remains adequate to meet demand in the Polyurethane segment.

Overall, while the demand outlook of Toluene remains stable in the domestic construction sector, procurements from downstream industries are expected to remain sluggish. Insufficient customer inventories and declining employment have contributed to a contraction in new orders and a faster decline in order backlogs compared to previous months, with inventories also decreasing at a similar pace. Moreover, despite considerable reductions in production levels due to ongoing market uncertainties, abundant supply of Toluene has consistently outpaced downstream demand. The cost support provided by feedstock naphtha has been minimal as its prices have continuously declined in the domestic market, fostering a pessimistic outlook among Toluene manufacturers. In reaction to subdued demand, manufacturing companies have scaled back their production.

Related News

Subdued Demand Leaves Stockpiles of Toluene in Europe
  • 17-Oct-2024 4:00 AM
  • Journalist: Kim Chul Son
European Toluene Market Faces Pressure as Consumer Industries Struggle
  • 30-Sep-2024 6:08 PM
  • Journalist: Peter Schmidt
US Toluene Market Struggles to Keep its Head High Amidst the Dipped Demand
  • 12-Sep-2024 1:47 PM
  • Journalist: Francis Stokes
Toluene Prices Slide in Europe as Construction Sector Struggles and Naphtha Costs
  • 27-Aug-2024 7:41 PM
  • Journalist: Robert Hume