Liquidity in the US aromatics market has dried up in recent weeks as both toluene and mixed xylene prices face continued pressure amid limited demand.
Since the last week of September, just one reported US nitration grade toluene trade went through on October 5 while similar illiquidity has been seen in the MX market, with the last reported trade heard on September 26.
Activity picked up briefly following the landfall of Hurricane Harvey in late August, however, since the middle of September much of the reported trade activity has come via commercial-grade toluene tenders.
Sellers were absent in the US aromatics market Tuesday and bids for October toluene were last seen at 230 cents/gal FOB USG while bids for October mixed xylenes were last seen at 235 cents/gal FOB USG.
On September 1, prompt-month toluene and mixed xylene were assessed at 251 cents/gal and 253 cents/gal on an FOB USG basis, respectively.
Aromatics prices in the US remain under pressure as demand has been weak from both the gasoline blending and chemical production segments.
Since Harvey made landfall, toluene's blend value has fallen nearly 121 cents to close Monday at around 214.50 cents/gal.
Additionally, the spread between the blend value and reformate has narrowed, falling from a high of around 160 cents in early September to about 22.50 cents on Monday, according to S&P Global Platts data.
Sources said demand was unlikely to improve as gasoline producers focus their attention on winter grade gasoline and look to butane to adjust the RVP and octane.
Additionally, demand from toluene-fed chemical production units has been tenuous amid continued weak margins.
TDP and MSTDP margins in the US have remained soft on the back of weaker benzene and xylene prices. TDP and MSTDP margins averaged $35.40 and $20.53/mt, respectively, in September.
In comparison, TDP and MSTDP margins on February 1 year were seen at $211 and $113/mt, respectively.
Benzene prices are not expected to strengthen in the near term as downstream styrene monomer prices remain weak on the back of softer demand in both Asia and Europe.
