It is an opportune time for toluene demand to increase as multiple indicators show toluene as an economically attractive purchase, sources said Tuesday.
Specifically, toluene was assessed Monday at 375 cents/gal FOB USG, 1.91 cents/gal under the blend value, and the premium to regular unleaded 87 USG gasoline shrank almost 8 cents/gal from Friday to 67.81 cents/gal.
The last time the premium was below 67.9 cents/gal was June 14, when it was at 65.88 cents/gal.
When asked Tuesday whether a low premium to gasoline would lead to more demand for toluene, a trader responded, "I'd agree. It still has to compete with alkylate and reformate, however."
Alkylate and reformate are competing blendstocks with toluene, and, like toluene, are blended into gasoline to boost the octane level.
Alkylate was assessed Monday at a 54 cents/gal premium to regular unleaded 87 USG gasoline, while reformate was assessed at 32 cents/gal premium.
A discount to the blend value also makes toluene attractive to purchase, said sources.
A market participant said Tuesday, "The blend value is the price floor," adding, "Even if it's not blended into gasoline, it could still be used for TDP, MSTDP, or HDA (processes)."
The toluene disproportionation (TDP), Mobil selective toluene disproportionation (MTSDP), and hydrodealkylation (HDA) processes all use toluene as a feedstock to produce various aromatics. The TDP process produces benzene and mixed xylene, the MSTDP process produces paraxylene in addition to benzene and mixed xylene, and the HDA process produces only benzene.
TDP margins Monday were up roughly $14/mt to $87.91/mt while MSTDP margins jumped about $15/mt to $172.49/mt. HDA margins, on the other hand, did climb approximately $7/mt, but was still firmly entrenched in negative territory at -$73.12/mt.
HDA margins have not been positive since March 2, when Platts showed them at $6.35/mt.
Toluene was last heard traded twice August 22, with Koch as the buyer for each instance for September. One deal was at 367 cents/gal DDP USG, with Citgo as the seller, and the other was at 372 cents/gal FOB USG, with Chemium as the seller.
September bids and offers Tuesday for low-dioxane toluene ranged from 378-390 cents/gal FOB USG by mid-day, with no trades heard, as sources said toluene was tracking NYMEX energy futures higher. There were no bids, offers, or trades heard for nitration-grade toluene.
As of 11:00 AM CDT, October NYMEX crude futures were up $1.38/barrel to $88.67/barrel and September NYMEX RBOB futures moved up 6.56 cents/gal to 297.20 cents/gal.
