Cost Support Drives Slight Rise in Toluene Market in January

February 2nd news

According to the commodity market analysis system, in January 2026, the Chinese toluene market showed an upward trend, reversing the weak situation in December and achieving an increase. Cost support and pre-holiday inventory replenishment became the core drivers. At the end of the month, the price increase narrowed due to insufficient demand. From January 1st to 29th, the price of toluene in China rose from 5,170 CNY/ton to 5,450 CNY/ton, with a cumulative increase of 5.42% during the period. The overall price range was significantly higher than the previous month.

In the first half of the month: The Chinese toluene market entered a mode of fluctuating upward. As the core production area, Shandong was driven by the continuous recovery of crude oil prices, and the main refineries were the first to raise their quotations. By mid-month, the local mainstream quotation range increased to 5300-5350 CNY/ton, an increase of more than 150 CNY/ton from the beginning of the month. The East China and South China regions followed suit with synchronized price hikes. The refineries under Sinopec also raised their quotations in tandem. The market trading atmosphere gradually became more active, and the negotiation focus steadily shifted upward, with the monthly high point reaching 5480 CNY/ton at one point.

Late month: The market entered a high-level fluctuation trend. Although quotations in the East China and South China regions remained high, the willingness to purchase after the end of the terminal's phased restocking decreased. The market was characterized by rigid demand, and although refineries had a strong intention to maintain prices, the pace of shipments slowed down. In some areas, small discounts were offered to promote transactions, and after a slight price adjustment, prices stabilized. Overall, the market maintained a high-level fluctuation, with the final end-of-month price at 5450 CNY/ton.

Cost Perspective: This month, the market trend exhibited distinct stage-specific characteristics—after reaching a peak, it encountered resistance and retraced, yet overall remained firmly anchored at high levels. At the beginning of the month, driven by tight supply, rising international prices, and expectations of pre-holiday inventory buildup among downstream users, the market kicked off a strong upward surge. Enterprises showed strong willingness to hold prices steady, leading to consecutive price hikes and a rapid climb in quotations. Mid-month, boosted by the synchronized strength of synthetic rubber futures in the downstream sector and a robust spot trading atmosphere, prices continued to hit new highs. Spot supplies became scarce, making it increasingly difficult to find low-priced goods. As prices surged significantly toward the end of the month, downstream users faced mounting cost pressures, putting sustained pressure on profit margins. Consequently, their willingness to enter the market for procurement noticeably declined, and transactions at high prices began to stall. The market thus experienced a temporary pullback. However, supported by an unchanged tight supply situation, the magnitude of the pullback was limited, and overall prices remained elevated throughout the month. As of the 28th, the settlement price for the March contract of U.S. WTI crude oil futures stood at $63.21 per barrel, while the settlement price for the April contract of Brent crude oil futures came in at $67.37 per barrel.

Demand side:

According to the commodity market analysis system, as of January 29, the price of paraxylene sold by Sinopec Sales Company remained stable, with the current price at 7,300 CNY/ton. The four major regions—East China, North China, Central China, and South China—are all implementing this price. The main facilities at Yangzi Petrochemical and Zhenhai Petrochemical are operating stably, and the product sales situation is normal. The current price has increased by 300 CNY/ton compared to December 30.

On the international market, as of January 28, the closing prices for paraxylene (PX) in the Asian region were USD 898–900 per ton FOB South Korea and USD 923–925 per ton CFR China, up by USD 31 per ton from the end of the previous month. The strengthening PX market has boosted the overall sentiment in China’s aromatics sector. Simultaneously, PX futures contracts on the Zhengzhou Commodity Exchange have also risen, with the 2603 contract closing at RMB 7,392 per ton, an increase of RMB 184 per ton from the end of the previous month, providing positive support to the toluene market.

China's blending oil and chemical industry demand this month showed a pattern of being strong at first and then weakening. In the early part of the month, as the Spring Festival holiday approached, downstream industries such as coatings, dyes, and pharmaceutical intermediates began to stock up before the holiday, leading to an increase in procurement, which became an important driving force for price increases. However, after the mid-to-late month when the phase of restocking ended, the downstream industries returned to a strategy of purchasing according to need, without any secondary concentrated restocking. The blending oil end maintained rigid demand procurement, which had a limited further pull on prices. By the end of the month, the market trading atmosphere turned lukewarm, becoming the main reason for the slight price correction. Overall, although there was no significant increase in demand this month, the phased support from pre-holiday restocking still provided strong support for the rise in toluene prices.

Future Market Prediction:

The current Chinese toluene market is influenced by a mix of bullish and bearish factors: On one hand, international crude oil prices remain high and volatile, providing cost support, and the Asian PX market continues to strengthen, creating a generally positive sentiment in the aromatics sector. Additionally, toluene supply in Shandong remains tight, with limited cargo availability, which supports toluene prices. On the other hand, as the Lunar New Year holiday approaches, downstream industries are gradually entering a shutdown and inventory preparation phase, and terminal demand is moving into a low season. The pace of resumption of work and production after the holiday is still unclear, and the market lacks sustained demand support. After the end-of-month restocking, the market is driven by essential demand, and market participants are cautious about pushing prices higher.

Overall, in the short term, the toluene market is expected to remain in a state of high-level fluctuations. Before the Spring Festival, prices are unlikely to see any significant pullback due to cost support and tight supply. After the festival, close attention should be paid to the trend of crude oil prices, the pace of resumption of production and operations downstream, and the correlated performance of the PX market—these factors will become the key variables driving the market’s subsequent trajectory.