2025 Toluene Market Fluctuates Downward, 2026 Supply and Demand Competition Outlook

December 31st news

According to the commodity market analysis system: In 2025, the average price of toluene in the Chinese market at the beginning of the year was 6,050 CNY/ton, and at the end of the year it was 5,130 CNY/ton, with an annual decline of 15.21%. The toluene market reached a high at the beginning of 2025 and then fluctuated downward. The overall trend for the rest of the year was weak, basically divided into two stages: interval fluctuations in the first half of the year, and continuous declines in the second half.

From the monthly candlestick chart of toluene, in 2025, the toluene market in China saw more declines than increases, with 4 months of upward movement and 7 months of downward movement. The highest price increase occurred in June, rising by 10.97%, while the largest price decrease happened in December, falling by 15.21% (as of the time of writing).

Note: The commodity price K-bar chart, using the concept of price movement K-line, reflects the weekly or monthly price changes in the form of a bar chart. Investors can make buy and sell decisions based on the changes in the K-bar chart. Red indicates an increase; green indicates a decrease; the height of the K-bar represents the change rate.

I. Review of the 2025 Toluene Market Trend

In the first half of 2025, the toluene market in China rose to its annual high at the beginning of the year, then declined, and rebounded in June. Overall, the market showed a range-bound trend in the first half of the year, with a slight increase of only 0.33%.

On the cost side: From January to May, the international crude oil market experienced an oversupply, causing Brent crude oil prices to fluctuate downward from $82 per barrel at the beginning of the year to a low of $60 per barrel in May. This downward trend also dragged down naphtha prices, continuously weakening cost support for toluene. After June, affected by geopolitical tensions in the Middle East, crude oil prices surged to $79 per barrel before retreating. Naphtha prices subsequently rebounded along with crude oil, providing temporary cost support for the toluene market.

Supply side: In the first half of the year, major refining and petrochemical enterprises in China operated at full capacity, continuously releasing increased toluene supply; although port inventory in the East China region fluctuated, there was no significant destocking trend overall, and the pressure on the supply side remained. After entering March-April, maintenance of some plants in China and the concentrated maintenance of local refineries in Shandong in June reduced market supply in stages, alleviating the pressure of loose supply to some extent. The supply situation in the first half of the year showed a trend of being weak initially and then strengthening.

On the demand side: In the first half of the year, profits in the downstream disproportionation industry were generally moderate. Although rigid demand for toluene remained stable, there was a lack of additional growth drivers. The blending oil industry experienced a temporary boost due to U.S. gasoline stockpiling ahead of the peak season, but the overall increase was limited. On the export market, the first half of the year saw an overall trend of high initial performance followed by a decline later on. From January to April, influenced by overseas plant maintenance, export orders grew steadily; however, from May to June, export volumes declined month-on-month, with June’s export volume reaching only 44,900 tons—a 23.2% drop compared to the previous month, thereby weakening the impact on demand in the Chinese market. During April and May, driven by continued declines in toluene prices and pessimistic market sentiment, downstream buyers showed insufficient willingness to take delivery at higher prices, resulting in weaker demand support and pushing prices down to their lowest level of the year. In June, as costs rebounded and supply tightened, demand picked up, helping to drive a market recovery.

Overall, in the first half of 2025, the toluene market in China was dominated by significant fluctuations in the cost side. The phased adjustments in the supply side and the divergent performance in the demand side jointly influenced the market. Although a recovery and rebound were achieved in June, it did not change the overall downward trend in the first half of the year.

Second Half: Supply and Demand Both Weak, Falling to a 5-Year Low in China

In the second half of 2025, the toluene market in China experienced a downward fluctuation, with weakness continuing in the third quarter and a brief recovery in the fourth quarter, resulting in a cumulative decline of 11.86%.

On the cost side: In the third quarter, the international crude oil market was affected by weak global economic recovery and OPEC+ production cuts falling short of expectations, leading to a continued supply-demand imbalance. As a result, Brent crude oil prices fell from $66 per barrel to a September low of $58 per barrel. Naphtha prices weakened in tandem, and the cost support for toluene continued to weaken. Entering the fourth quarter, heightened geopolitical tensions in the Middle East, coupled with the onset of the peak winter demand season in the Northern Hemisphere, triggered a rapid rebound in crude oil prices to $72 per barrel. The naphtha market followed suit, showing a noticeable upward trend. Consequently, the cost support for toluene shifted from weak to strong, laying a solid foundation for price recovery.

Supply side: From July to September, Chinese facilities maintained full production capacity, with toluene output rebounding. Coupled with the continuous opening of the import window in the third quarter, the toluene import volume increased by 15% month-over-month. The port inventory in East China climbed to a high of 420,000 tons, significantly increasing supply pressure. Starting from October, refineries in many parts of China entered their annual maintenance cycle, causing the facility utilization rate for aromatics to drop to 62%. Additionally, the import volume decreased by 20% month-over-month due to overseas plant maintenance. The market supply situation shifted from being loose to a tight balance, with the port inventory rapidly declining to below 300,000 tons. This significantly relieved the supply pressure, and the overall supply situation in the second half of the year was characterized by initial looseness followed by tightening.

On the demand side: In the third quarter, the operating rate of the toluene disproportionation industry remained low at 60%, leading to weaker purchasing activity for toluene. Meanwhile, in the blending industry, demand was also sluggish due to the narrow price spread between toluene and gasoline. Under these dual headwinds, toluene prices fell rapidly in September. In the fourth quarter, as costs began to recover and supply tightened, the operating rate of the disproportionation industry rebounded, boosting procurement volumes. At the same time, with the onset of the peak season for U.S. blending demand, toluene export orders increased by 25% month-on-month, significantly strengthening demand-side support and driving prices to steadily rise.

Overall, in the second half of 2025, the toluene market in China was dominated by significant fluctuations in the cost side, with seasonal adjustments on the supply side and phased improvements in demand working together. In the third quarter, under a pattern of weak supply and demand, the market continued to weaken. In the fourth quarter, due to a rebound in costs and a tightening balance of supply and demand, there was a brief recovery, but ultimately, the trend remained one of fluctuating downward.

2. Industrial Chain Structure

Toluene is an important organic chemical raw material. The production of toluene mainly occurs through two routes: petroleum refining and coal chemical processes. In petroleum refining, it is primarily obtained by hydrogenation and extraction of crude benzene from the distillation of coal tar. In coal chemical processes, it is produced by extraction after catalytic cracking of naphtha.

Toluene's downstream products mainly include TDI, benzoic acid, phenol, caprolactam, and PTA, among others. Its application range is extensive, suitable not only for blending gasoline to improve its octane rating but also for preparing various toluene derivatives such as para-xylene, ortho-xylene, and benzyl alcohol. The end applications span across industries such as petrochemicals, fuels, pesticides, and synthetic materials in China.

III. 2026 Toluene Market Outlook:

Cost Perspective: Oil prices to fluctuate at low levels in 2026, with weak cost-side support.

The ongoing intensification of conflicts—such as the Russia-Ukraine conflict and the situation in the Middle East—will continue to exert unpredictable, direct pressure on oil prices, triggering phased fluctuations but unlikely to alter the long-term trend. The oversupply situation on the supply side is expected to persist through the first half of 2026. According to IEA forecasts, global daily oil oversupply could reach 4.09 million barrels, with U.S. shale oil production projected to increase by 1.2 million barrels per day, driving most of the incremental growth. Although OPEC+ plans to suspend its production increases in the first quarter of 2026, internal divisions and insufficient spare capacity will limit the effectiveness of its policy adjustments, making it highly probable that the price center of gravity will continue to move downward. Influenced by the interplay between supply and demand, coupled with geopolitical conflicts and OPEC+ policy adjustments, the crude oil market in 2026 is forecast to exhibit an overall “low-level volatile” trend.

Raw Material Side: Naphtha Production Rises Steadily; Raw Material Supply is Ample

Naphtha is the main raw material for producing toluene, and its production and operation status will directly affect the development of the toluene industry. With the continuous improvement of China's refining capacity and the sustained release of downstream market demand for naphtha, China's naphtha production has steadily increased. Data shows that from January to November 2025, China's naphtha production was approximately 73,955,000 tons. Currently, the main production areas of naphtha in China are provinces such as Shandong, Guangdong, Liaoning, and Zhejiang, with Shandong Province having the most prominent output, accounting for about 35%. The steady growth in naphtha production provides an important raw material guarantee for the development of the toluene industry.

In 2026, China's naphtha production is expected to see a slight increase, with an estimated year-on-year growth rate of around 0.6% to 1%. This will lay a solid foundation for the supply of toluene. With ample feedstock availability and the gradual commissioning of refining and petrochemical projects, toluene’s basic production volume will steadily rise. On the cost side, toluene’s production costs will follow the trends in the naphtha and crude oil markets. Additionally, the commissioning of new PX capacity in 2026 will continue to boost demand for toluene disproportionation, partially offsetting fluctuations in blending oil demand and providing support for toluene prices.

Supply Side: Toluene supply in China is expected to increase in 2026.

Toluene, as a core raw material in the basic organic chemical industry, is seeing a continuous increase in market demand both internationally and in China. In 2026, China's supply will continue to expand structurally. The growth in supply is mainly driven by the ongoing implementation of large-scale integrated refining and petrochemical projects. It is expected that new capacity additions will be around 1.65 million tons for the year, primarily from aromatics units associated with leading companies such as Hengli Petrochemical, Shenghong Refining, and Huajin Aramco. The commissioning schedule is concentrated in the second half of the year, with the Bohai Rim and East China regions being the main areas for new capacity, together contributing over 70% of the new capacity. In the future, producers will place greater emphasis on the toluene commodity market, and their enthusiasm for external sales will increase. It is expected that the supply of toluene in the Chinese market will continue to rise steadily in 2026.

Demand Side: Steady with a Rising Trend

Toluene has a wide range of applications, from blending gasoline to producing various toluene derivatives such as para-xylene, ortho-xylene, and benzyl alcohol. Currently, the downstream consumption structure of toluene in China is stable, with about 52% used for blending gasoline, 26% for disproportionation, 12% as solvents, and 10% for other uses such as TDI. The downstream consumption structure is relatively stable. Based on the current information, it is predicted that the demand for toluene in 2026 will continue to show a trend of "steady growth with structural differentiation," with an expected annual growth rate of about 3%-5%, indicating a steady increase in industry demand.

In the oil blending sector: Demand remains dominant but is slowing down, currently accounting for about 52%. The growth in vehicle ownership through 2026 will provide solid support; however, under the China VI emission standards, the proportion of toluene blended into fuels has already reached a low level. Coupled with the rising penetration rate of new-energy passenger vehicles exceeding 35%, which is curbing demand for internal-combustion-engine vehicles, toluene demand in the oil blending sector is expected to increase by 1%–2% year-on-year, with its share slightly declining to around 50%.

Regarding disproportionation: Currently accounting for approximately 26%, in 2026, PX projects such as Huajin Amec’s 2 million tons and Jiujiang Petrochemical’s 1.5 million tons will enter a concentrated commissioning phase. Coupled with expanded downstream capacity for pure benzene, this will significantly boost toluene demand. The implementation of integrated refining-and-chemicals facilities equipped with disproportionation units will also enhance companies’ willingness to procure raw materials. It is expected that disproportionation demand will increase by 8%-10% year-on-year, raising its share to 29%-30%.

Solvents and other sectors: Demand is stable, with solvents currently accounting for about 12%. Benefiting from the recovery of the real estate market and the growth in demand for high-end solvents, it is expected to increase by 2%-3% year-on-year; TDI, pharmaceutical intermediates, etc. (accounting for 10%) are driven by the recovery of the end market, with demand growing moderately by about 3%.

Overall, the demand for toluene in 2026 will show a pattern of "stable for blending, strong for disproportionation, and steady for other uses," with total demand for toluene in China rising steadily. In 2026, attention should be paid to the commissioning status of PX facilities and the impact of the growth of new energy vehicles on the blending industry.

Export Side: Toluene export volume steadily increases

Toluene exports have become a key factor in China's supply and demand balance, with the export pattern undergoing a fundamental transformation. In 2022, China transitioned from a net importer to a net exporter, and the export momentum continued to strengthen. Customs data for January to November 2025 showed that exports reached 890,100 tons, a year-on-year increase of over 89%, setting a new historical high for the same period and significantly alleviating China's supply pressure.

In 2026, toluene exports are expected to continue growing, though the growth rate will stabilize. The annual export volume is forecast to exceed 1.1 million tons, representing a year-on-year increase of 10% to 15%, driven by three key factors. First, the acceleration of industrialization in emerging markets such as Southeast Asia is generating rigid demand. Countries like India, Vietnam, and Indonesia are speeding up their manufacturing upgrades, with continuous capacity expansion in industries such as coatings, pesticides, and chemical intermediates, thereby driving rapid growth in demand for toluene as a basic raw material. Meanwhile, local toluene production capacity has lagged behind demand growth, keeping import dependence at a high level and providing ample room for China’s toluene exports to expand. Second, China’s integrated refining and petrochemical projects continue to come online. In recent years, leading private refiners and petrochemical companies such as Hengli and Rongsheng, along with major players like Zhenhai Refining & Chemical, have successively commissioned their integrated facilities, significantly boosting the concentration of China’s toluene production capacity. Finally, European toluene production capacity continues to shrink due to soaring energy costs. From 2023 to 2024, Europe has cumulatively shut down approximately 11 million tons of petrochemical capacity, including a substantial number of aromatic-related units. The resulting market gap from the contraction of domestic European toluene supply further creates favorable conditions for China’s toluene exports. In 2025, export volumes are set to reach new highs, providing certain positive support for the Chinese market.

Market Forecast:

In the short term, at the end of the fourth quarter, the toluene market saw a slight price recovery, driven by the positive impact of traditional downstream inventory-building demand that typically peaks in December. Looking ahead to 2026, both cost and supply conditions don't appear to hold many bright spots, suggesting an overall stable market environment. However, demand remains supportive, with room for further growth in the Shandong region's blending oil market around the Spring Festival period. Additionally, the disproportionation industry, boosted by high benzene prices, is also expected to benefit somewhat. In terms of exports, performance has been consistently strong in recent years; supported by favorable demand trends, the toluene market is anticipated to retain some upward momentum early in 2026.

In the long term: The cost of toluene is still supported, and the supply is expected to increase. There is still room for growth in downstream demand. Overall, future demand performance is more worthy of attention. The blending demand growth rate is expected to slow down to 1%-2% due to the penetration of new energy. The demand in the disproportionation industry is expected to grow by 8%-10%, benefiting from the high price of benzene. Exports will continue to show a net export pattern, with an estimated annual export volume of 1.1 million tons, an increase of 10%-15% year-on-year. Under the mixed bullish and bearish market conditions, the toluene market is expected to maintain a range-bound trend, with prices fluctuating around 5,800-7,000 CNY/ton throughout the year. Attention should be paid to the commissioning of PX facilities and the increase in exports.