Toluene and MX pull back correctively

East China toluene and mixed xylenes markets have been moving up since the beginning of Jan 2022. It was mainly attributed to sharp rise in crude oil as well as good demand. Refreshing new highs, WTI crude futures hiked from $76.08/bbl on Jan 3 to $85.14/bbl on Jan 21, up a whopping 11.91%. East China toluene price soared from 5,760yuan/mt to 6,030yuan/mt and MX from 6,050yuan/mt to 6,230yuan/mt over the same period.

However, toluene and MX pulled back from Jan 21 as crude oil and relevant aromatics markets trimmed gains.

The margins of toluene disproportionation to produce benzene and MX got squeezed. Though benzene price hiked in Jan, TDP margins reduced as the spread of MX to toluene narrowed. The margins were less supportive to toluene price.

In Jan, large amount of toluene and MX cargoes was expected to arrive at East China, especially for MX. However, port inventory remained low, as delivery from storage reserves was fast. Blending demand was good with buyers restocking refined oil products prior to the Spring Festival holiday starting from end-Jan, supportive to toluene and MX.

PX-MX spread widened slightly from $100/mt in the beginning of Jan to $123/mt on Jan 20. Zhejiang Petroleum & Chemical had restarted its 2 million mt/yr PX line but the operating rate was kept low. Sinochem Quanzhou restarted its 800kt/yr PX plant in late Jan but had yet to get products.

Toluene and mixed xylenes markets are expected to correct in weakness as crude oil falls back and several downstream plants are shutting for holiday toward the end of Jan. Sinochem Quanzhou has restarted its reformer, and an influx of toluene cargoes would arrive at East China in Feb.