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Insight | Time:Dec 27 2017 3:08PM
Toluene market weakens amid expectation of supply increase
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Coastal toluene inventory kept decreasing in recent weeks in East China, as several domestic plants were under maintenance. Meanwhile, imported cargo was limited, as the price spread of CNY toluene to USD cargo was too narrow for arbitrage from CFR China market to East China market. Toluene inventory in East China dropped continuously in Dec, hitting this year’s new low. Hence, toluene price rose with supply getting tighter. Toward the end of the month, however, the price pulled back as the tight situation was expected to ease.

On the demand side, consumption of toluene did not improve much in Dec. Operating rate of downstream fine chemical plants did not increase, and the requirement for feedstock toluene did not grow. Demand for toluene in gasoline blending remained sluggish as well, and the economics were not good as alternative blendstocks like mixed aromatics and MTBE had been cheaper since early Dec.

Supply was the key factor that dictated the trend of toluene price in Dec. Some large production plants were under turnarounds this month, and thus supply was reduced. However, some plants plan to restart in the end of Dec, and some have even started preselling products. By the middle of Jan, the tight situation in toluene market is expected to be alleviated.

Turnaround and restart schedule of domestic plants
Company Toluene capacity (kt/yr) MX capacity (kt/yr) Status
CNOOC Taizhou 175 220 Closed on Nov 7, to restart in end-Dec
Sinopec Hainan Refining 220 0 Closed from Nov 18 to Jan 18
Sinochem Quanzhou 300 400 Closed on Dec 3 for 45-50 days
Chambroad Petrochemical 200 170 To start in early 2018
CNOOC Huayue 54 93.6 Restarted on Dec 21, to begin production in end-Dec

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