Supply and Demand Weigh on Costs, Toluene Market Declines in China

April 20th News

According to the commodity market analysis system, from April 13 to 20, 2026, the Chinese toluene market showed a continuous downward trend, with prices in Shandong region significantly dropping. The price of toluene in Shandong decreased from 7,417.67 CNY/ton to 6,727.67 CNY/ton, with a price decrease of 9.3% during the period. The main reasons for this decline are the weakening of crude oil prices, relatively loose supply, and weak demand, all of which have contributed to the continued weakening of the market. Overall, trading activity was light, and market participants were cautious.

Cost Perspective: This week, international crude oil prices initially declined and then rebounded, with the overall price center of gravity shifting downward, continuously weakening the cost support for toluene. Geopolitical tensions in the Middle East fluctuated throughout the week, causing significant volatility in crude oil futures prices. Although crude oil prices briefly rebounded during trading sessions after a substantial drop earlier, this rebound failed to gain sustained momentum. The retreat of crude oil prices from their previous highs directly undermined the cost support for toluene production. Coupled with growing market concerns about the future trend of crude oil prices, the transmission of cost-related positive factors has been hindered. Meanwhile, the price spread between pure benzene and toluene remains loose, and the arbitrage window between PX and mixed xylene has opened. While this provides some support for toluene, the support is limited and insufficient to offset the negative impact of weaker crude oil prices. As of March 13, the settlement price for the June contract of U.S. WTI crude oil futures was $82.59 per barrel, while the settlement price for the June contract of Brent crude oil futures was $90.38 per barrel.

Supply side:

The Chinese toluene market supply remains loose, with major refineries and local refineries in Shandong actively shipping, ensuring ample market supply. This week, toluene units at major refineries such as Sinopec and CNPC in China have been operating stably, with posted prices adjusted downward according to the market. In the South China region, companies like Guangzhou Petrochemical, Maoming Petrochemical, and Zhongke Refining & Chemical are steadily releasing external sales. Local refineries in Shandong are maintaining high operating loads, and due to the continuous decline in market prices, their willingness to ship has increased, leading to active price reductions to boost sales. Although the second quarter is traditionally the maintenance season for the industry, with maintenance plans for companies like Jinling Petrochemical and Taizhou Petrochemical, no large-scale maintenance has been carried out this week. Overall, the toluene production capacity in China is sufficiently released. Coupled with the reasonable level of port inventory in East China, there is an abundance of circulating supply, putting significant downward pressure on prices from the supply side.

Demand side:

The downstream industries' procurement demand for toluene remains persistently low, with insufficient support from rigid demand. Within the week, the operating rates of toluene downstream industries such as TDI, coatings, and solvents in China remained at low levels. The terminal market consumption was weak, and most downstream factories adopted a strategy of purchasing according to need and maintaining low inventories, showing a clear resistance to high-priced toluene. Even with continuous significant price reductions, the pace of restocking by the downstream sector remained slow. Transactions within the market were mainly small orders based on rigid demand, with large orders being rare, making it difficult for the demand side to provide effective support to the toluene market.

According to the commodity market analysis system, from April 13 to 20, the PX quotation in China remained stable. Sinopec Sales Company's PX factory price was consistently set at 9,600 CNY/ton, with uniform pricing in the East China, North China, Central China, and South China regions. The main production facilities of Yangzi Petrochemical and Zhenhai Petrochemical operated smoothly, and the overall shipping rhythm was normal. The Asian PX external market prices weakened synchronously. On April 10, the FOB Korea average price for Asian PX was about 1,144 USD/ton, and the CFR China average price was about 1,169 USD/ton. By April 16, the FOB Korea average price had dropped to 1,213 USD/ton, and the CFR China average price had dropped to 1,238 USD/ton. Overall, the external market prices showed a slight downward trend, while the price trend in China was significantly stronger than the external market.

Future Market Forecast:

In the short term, the Chinese toluene market will still face multiple pressures and is likely to maintain a weak and volatile trend. The cost of crude oil remains uncertain, and if crude oil continues to weaken, it will further drag down the toluene market. The supply side's loose situation is unlikely to see significant improvement in the short term, with ample market supply suppressing the space for price rebound. On the demand side, the recovery of downstream industries is slow, and the release of rigid demand is limited; the procurement follow-up situation will be the key variable for the market trend. It is expected that the toluene market will not see a significant reversal in the short term. Subsequently, it is necessary to closely monitor the fluctuation of crude oil prices, the restocking pace of downstream factories, and changes in market news, and be cautious about the risk of further price declines.