US spot toluene was assessed 8 cents ($24.32/mt) lower Monday compared with Friday's mark at a nearly seven-month low of $4.07/gal ($1,237.28/mt) FOB US Gulf Coast due to weak demand and excess supplies, sources said.
The last time spot prices were below Monday's assessment was on August 27, 2012, when toluene was priced at $4.02/gal FOB USG, according to Platts data. Spot prices were assessed as high as $4.53/gal FOB USG on February 12, but have been falling since then.
Toluene, which is used as a feedstock for benzene, mixed xylene and paraxylene production, has had no firm support from the latter markets as supplies are ample due to weak demand in downstream markets.
The production of benzene and mixed xylene from toluene was unattractive as toluene disproportionation margins were negative, estimated at minus $36.85/mt as of Friday, according to Platts data.
Low mobile selective toluene disproportionation margins provided indication that paraxylene and mixed xylene production was slightly positive as margins were estimated at $64.37/mt as of Friday, according to Platts data.
According to sources, turnarounds have weakened benzene demand because styrene supply is already long and producers have no need for benzene.
Sources also said weaker mixed xylene demand due to excess product and a lack of demand for downstream paraxylene production.
With low PX demand and market participants holding a bearish outlook, toluene support from that downstream market could remain absent for a while.
Some market participants expect a rise in toluene prices after the turnarounds are over, while others believe excess supply in US benzene and styrene markets will remain an issue at least until the middle of April.
