Crude Oil Strengthens, Toluene Market Follows Suit

January 16th, news:

According to the commodity market analysis system, from January 1 to January 15, 2026, the toluene market in China showed an upward trend. The benchmark price of toluene was 5,170 CNY/ton on January 1 and increased to 5,310 CNY/ton on January 15, a rise of 2.71%. The core driving force for the market's upward trend in this period came from the cost support of crude oil, tightening supply, and the positive linkage within the aromatics industry chain. However, in the later stage, due to wide fluctuations in crude oil prices, cautious downstream buyers, and divergent regional supply expectations, the market struggled to sustain its upward momentum, and the pressure to maintain high prices gradually became evident.

Cost Perspective: According to the commodity market analysis system, as of January 15, the settlement price for the March contract of U.S. WTI crude oil futures stood at $59.08 per barrel, while the settlement price for the March contract of Brent crude oil futures reached $63.76 per barrel. During this period, international crude oil prices exhibited a wide-ranging fluctuation pattern—first rising continuously and then experiencing a sharp pullback toward the end of the month—resulting in phased differences in cost support for the toluene market. Earlier, international crude oil futures posted five consecutive gains, with WTI crude oil breaking above $60 per barrel and Brent crude oil rising in tandem, both reaching their highest levels in nearly two months. This created a strong bullish atmosphere in the commodity markets, directly driving up the prices of toluene and its upstream and downstream aromatics products. Chinese crude oil futures also strengthened in parallel, posting consecutive gains from January 9 to January 13, with the closing price on January 13 reaching 445.6 yuan per barrel—a rise of 29.4 yuan per barrel from the low on January 8—demonstrating significant cost-side support. However, on January 15, international oil prices suffered a sharp drop, and geopolitical premiums rapidly faded. Affected by factors such as the easing of U.S.-Iran relations, an unexpectedly large increase in U.S. crude oil inventories, and a decline in OPEC+ production cut compliance, WTI crude oil saw a single-day price decrease of 3.31%, closing at $59.83 per barrel; Brent crude oil fell by 3.49%, closing at $64.19 per barrel—the largest single-day price decline since November 2025. This sharp short-term correction in oil prices weakened the cost-side support for toluene, and coupled with growing market expectations of continued oil price volatility, sentiment in the toluene market shifted toward caution, leaving insufficient momentum for further price increases.

Supply side:

During this period, China’s toluene supply has been generally tight, with significant regional disparities driven by differences in plant operations and cargo arrivals, serving as the key support for rising prices. In Shandong, the supply-demand balance remains tight, providing the strongest upward price momentum. Xinyue Chemical’s plant restart has been delayed, YouTai Technology has halted operations for maintenance, Huaxing Petrochemical’s toluene is primarily used internally, and Yulong Petrochemical’s regional circulation has declined, leading to a continuous contraction of available supplies. Refineries’ premium bidding has become the norm, prompting sellers to actively push up quotes, and prices have surged above the 5,000 CNY/ton mark, with brisk trading activity. In Jiangsu, the volume of ship cargoes arriving at storage areas has declined, resulting in tighter spot supplies. Coupled with the favorable impact of rising crude oil and aromatics prices, holders are aggressively maintaining high prices; paper-based transactions have become frequent, and the opening of arbitrage windows for exports has further reinforced sellers’ reluctance to sell, causing prices to follow Shandong’s upward trend. In Guangdong, the market has shown a “tight-first, then loose” pattern: earlier delays in ship cargoes led to inventory depletion and price increases, while the subsequent steady arrival of cargoes has put downward pressure on prices. Moreover, China’s major refineries maintain stable operating rates but tend to use more of their output internally.

Sinopec's toluene enterprises are operating normally, with stable production. Most of the products are for internal use, and production and sales are balanced. As of December 12, the East China company quoted 5,400 CNY/ton, the North China company quoted 5,200 CNY/ton, the South China company quoted 5,500 CNY/ton, and the Central China company quoted 5,250 CNY/ton.