US Toluene Prices Lose Steam towards the end of April 2024

Louisiana (USA)- Toluene prices in North America have remained stable despite the rising prices of WTI crude oil and naphtha in the region. Toluene producers are working to maintain a balance between supply and demand within the domestic market. The production cost of Toluene is closely linked to the overall costs of naphtha and crude oil in the domestic market. Market fluctuations have been influenced by changes in US crude oil inventories, further contributing to Toluene price volatility. The final price for Toluene in the US market was recorded at USD 1170 per metric ton, Free on Board (FOB) Louisiana, for the week ending April 26th.

Crude oil prices increased earlier in the week due to a surprising decrease in inventories reported by the API. This helped recover some of the losses from earlier in the week when tensions in the Middle East seemed to calm down. Furthermore, the US and Europe are preparing for new sanctions against Iran, although these may not have a material impact on oil supply in the immediate term, affecting the final production cost of Toluene. Overnight, crude oil futures have dropped by 3% and are down 8% for the month, trading close to two-month lows. This decline is attributed to indications of weak demand in the US and easing tensions in the Middle East.

According to the latest report from the EIA, US inventories increased, raising concerns about weakening demand. Oil prices have fallen sharply this week after reaching their highest level since October following Iran's unprecedented attack on Israel. The decrease in oil futures is occurring alongside signs of reduced tensions in the Middle East. The US and Saudi Arabia are discussing a potential agreement that would provide Riyadh with security assurances and the possibility of establishing diplomatic relations with Israel if the Israeli government ends the conflict in Gaza.

Another key factor influencing Toluene price changes in the US market is inflation. The demand outlook for various products like paints, varnishes, detergents, Toluene diisocyanate, benzoic acid, and the personal care sector is expected to remain steady in the coming weeks. The coatings sectors are regaining as construction employment increased in 65% of the 358 metro areas in the US. This growth in employment reflects the continued expansion of construction demand, even amidst a shortage of workers.  According to ChemAnalyst, Toluene prices in the domestic market are likely to remain favourable due to stable demand and price fluctuations in WTI crude oil and naphtha. The increase in cost support is likely to keep the prices firm in the US market into May 2024.