Cost Weakening Combined with Weak Demand: Toluene Market Shakes and Declines in February

March 2nd News

According to the commodity market analysis system, from February 1 to 28, 2026, the price of toluene in China decreased from 5,540 CNY/ton to 5,400 CNY/ton, with a cumulative decrease of 2.53% during the period. The price first increased and then decreased within the month, showing an overall downward trend.

In February, the cost end of toluene as a whole showed a trend of first strengthening and then weakening, with support gradually fading. At the beginning of the month, the intensification of geopolitical conflicts in the Middle East led to significant fluctuations and increases in international crude oil prices. Naphtha prices also strengthened in tandem, and the cost support for the aromatics industry chain significantly increased, providing a phased upward momentum for the toluene market, with market quotations slightly rising. Entering the mid-to-late month, as the geopolitical conflicts did not further escalate, market sentiment gradually cooled down. Crude oil prices fell from their highs and entered a range-bound pattern. Coupled with the ongoing expectations of OPEC+ production increases, the driving effect of crude oil on toluene and other chemical products noticeably weakened. Meanwhile, the posted prices of toluene by major refineries in China were adjusted downward, and the supply of goods within the region gradually increased. The willingness of holders to maintain high prices continuously decreased. The cost end, which was initially favorable, gradually turned unfavorable, becoming an important factor in pushing down toluene prices. Additionally, the divergent trends of benzene, PX, and other aromatics products led to a weaker overall linkage in the industry chain, continuously limiting the upward space for the toluene market.

Cost aspect:

In February, the international crude oil market generally showed a volatile pattern—first rebounding and then declining—entirely influenced by the interplay of geopolitical developments, market sentiment, and supply-and-demand expectations. This dynamic provided temporary support to toluene costs at the beginning of the month, but this support gradually weakened. According to market data, the price fluctuations of U.S. crude oil main contracts in February were pronounced. At the start of the month, escalating geopolitical tensions in the Middle East triggered a rapid rise in prices, with the closing price reaching $63.90 per barrel on February 3. Subsequently, as the conflict failed to escalate further and risk aversion in the market eased, prices began to fall, dropping to $62.91 per barrel by February 12. In the mid-to-late part of the month, prices once again experienced volatile adjustments, generally staying within the $62–$67 per barrel range. By February 27, the closing price had rebounded to $67.29 per barrel, resulting in an overall monthly price trend characterized by “initial rise followed by stabilization and converging volatility.” From the perspective of influencing factors, geopolitical developments were the core driver of crude oil price fluctuations this month. The escalation of conflicts at the beginning of the month pushed up risk premiums, boosting oil prices. However, as the situation stabilized in the mid-to-late part of the month, these premiums gradually subsided. Meanwhile, growing expectations of increased production from OPEC+ and the seasonally weaker global demand for crude oil further constrained the upside potential for oil prices, causing the cost support for downstream petrochemical products such as toluene to shift from initially strong to increasingly weak—a trend that indirectly affected the price movement of toluene. As of the 27th, the settlement price for the April contract of U.S. WTI crude oil futures was reported at $67.02 per barrel, while the settlement price for the May contract of Brent crude oil futures was reported at $72.87 per barrel.

Demand Side:

According to the commodity market analysis system, from February 1 to 28, the PX market price in China showed a fluctuating trend. Sinopec Sales Company made minor adjustments to the paraxylene (PX) price during the period. As of February 28, the four major regions—East China, North China, Central China, and South China—were uniformly implementing a price of 7650 CNY/ton, which was higher than the price on February 1. The main facilities at Yangzi Petrochemical and Zhenhai Petrochemical operated stably, with normal product sales and stable production and sales throughout the month.

On the international market, from February 1 to 28, paraxylene (PX) prices in Asia experienced volatile downward trends. The monthly closing price range was between USD 871 and USD 900 per ton FOB South Korea and between USD 896 and USD 925 per ton CFR China. As of February 28, the closing prices for the Asian PX market were USD 871–873 per ton FOB South Korea and USD 896–898 per ton CFR China, representing a slight decline from the prices on February 1. Overall, price fluctuations remained moderate.

In February, the toluene market showed overall weak demand. The delayed resumption of work following the Spring Festival was the key factor dragging down prices. Meanwhile, the phased fluctuations in the PX market also exerted a certain ripple effect on toluene demand. This month, affected by the extended Spring Festival holiday, the operating rates of downstream industries such as coatings, inks, adhesives, and rubber additives plummeted significantly. Most enterprises suspended operations for the holiday, and end-user procurement essentially came to a standstill, with only minimal, essential restocking activities continuing. After the pre-holiday stocking period ended, downstream companies generally held relatively high inventory levels. The pace of resuming production after the holiday was slower than expected, keeping the market trading atmosphere persistently subdued. Both traders and downstream manufacturers focused primarily on destocking, adopting a cautious purchasing attitude and mostly procuring goods only as needed, without any signs of concentrated restocking. As a result, the toluene market struggled to find effective support. Demand for blending oil remained stable with no significant increase, and chemical demands such as toluene disproportionation and alkylation also stayed at normal levels, limiting the overall consumption of toluene. Consequently, the demand side continued to operate in a weak state.

Future Market Forecast:

The Chinese toluene market is expected to show a volatile yet generally strong trend in March, primarily influenced by the crude oil market. On the cost side, the escalation of geopolitical tensions in the Middle East has led to disruptions in shipping through the Strait of Hormuz. Coupled with OPEC+ maintaining its policy of pausing production increases in March, crude oil and naphtha prices have strengthened, providing robust cost support for toluene. On the demand side, downstream industries are gradually resuming operations, and the PX market is likely to see marginal improvement as plant maintenance comes to an end and PTA utilization rates rise, thereby providing some boost to chemical demand for toluene. However, terminal demand remains limited, continuing to constrain the upward momentum of the market. On the supply side, Chinese refineries maintain stable operating rates and have ample supply, further limiting the room for price increases. Overall, the toluene market is expected to remain volatile yet generally strong in March. Nevertheless, it is crucial to be vigilant about the risk of a pullback triggered by a cooling of geopolitical tensions. Going forward, close attention should be paid to developments in the Middle East, shipping conditions through the Strait of Hormuz, international crude oil price trends, the resumption of downstream operations, and changes in the supply and demand dynamics of PX.