US spot toluene was assessed Thursday at a 17-month high at $2.44/gal ($741.76/mt) FOB US Gulf Coast.
US toluene pricing hasn't been seen higher since August 10, 2015, based on S&P Global Platts data.
Toluene pricing saw a 16-month high during December at $2.41/gal because of limited supply and bullish expectations for more toluene to be absorbed by gasoline to boost octane due to the Environmental Protection Agency's Tier-3 regulations on sulfur that went into effect January 1, sources said.
Because sulfur content in gasoline would have to be reduced to 10 ppm from 30 ppm, there would be an octane shortage and more toluene would be needed to satisfy that shortage.
These same dynamics have persisted, sources said, pushing toluene pricing to the 17-month high.
Demand will strengthen throughout the first quarter and supply will likely remain limited as toluene goes into the gasoline pool, sources said.
Day over day, US toluene pricing gained 2 cents/gal.
