Asia’s Toluene Prices Sink to 3-Month Low on Weak Demand, Supply Glut
Asian toluene prices have fallen to their lowest levels in nearly three months, weighed down by weak demand, poor downstream product spreads and burgeoning supply, market participants said.
As of Oct. 3, Asia’s toluene price stood at $651 per metric ton FOB Korea, slipping $20.50/mt or 3% month on month, according to OPIS data. The last time prices were assessed at this level was on July 11, OPIS data shows.
The continuous fall in toluene prices reflects a bearish market outlook with limited signs of recovery post-Chuseok in South Korea and following the Golden Week holiday in China, an industry source noted.
Demand for toluene began to weaken following the reciprocal tariffs announced by U.S. President Donald Trump in April. These tariffs subjected South Korea’s toluene exports to the U.S. to a baseline 10% tariff. The timing was significant, as the announcement coincided with the U.S. peak gasoline blending season, a period when South Korean toluene is typically exported for use in the blending pool.
The implementation of the new tariffs immediately rendered the country’s toluene exports significantly more expensive for U.S. buyers. Consequently, U.S. refiners became unwilling to utilize toluene for the gasoline blending pool, and promptly pivoted to using mixed xylenes, which were exempt from the new duties.
This swift substitution meant that the typical U.S. consumption of Asia’s toluene for blending purposes from April to June was abruptly curtailed. Without this critical demand outlet, the overall market equilibrium shifted, causing Asian toluene demand to weaken noticeably throughout the second quarter.
On the other hand, refinery maintenance in Southeast Asia, Japan and Australia in the third quarter spurred an increase in gasoline blending activity among South Korean refiners. These refiners are reportedly blending more toluene into their gasoline pools for export to these markets, bumping up domestic Korean toluene consumption and demand.
The resulting increase in demand from South Korea saw its toluene exports plummet by 40% month on month to 33,607 mt in August, while imports surged by a dramatic 72.2% over the same period, according to customs data.
Toluene demand will continue to be driven by gasoline blending in October, though with less intensity than in the preceding two months. While Southeast Asia’s gasoline demand has recently absorbed much of Northeast Asia’s surplus toluene through blending, the latter market faces potential oversupply pressure as gasoline outflows from mainland China are expected to increase following the post-holiday taper in domestic consumption after the Golden Week, according to Chemical Market Analytics by OPIS.
Downstream consumption has further compounded the market’s weakness, with an industry source noting that demand from the solvent sector in Southeast Asia has been seasonally sluggish, directly constrained by the onset of the monsoon season. Simultaneously, the Indian market contributed to the overall bearish sentiment by struggling with a persistent oversupply situation. These combined regional factors — climate-driven reduction in Southeast Asia’s solvent demand and the ongoing inventory glut in India –- have significantly contributed to the overall weaker toluene demand observed over the past few months.
However, solvent demand is expected to recover post-monsoon season in October, particularly in India’s paints and coatings sector, while downstream consumption in the toluene diisocyanate sector is set to improve slightly in China with the restart of Wanhua Chemical’s 300,000 mt/year TDI plant in Yantai, although the furniture and automotive demand continued to remain weak.
Overall toluene demand in recent weeks has also been suppressed by poor profitability in the downstream derivative sector. The benzene-to-toluene spread stood at $41/mt on Oct. 3, down 5.7% month on month, while the mixed xylenes-to-toluene spread rose 33.3% over the same period to $20/mt, according to OPIS data.
Estimated hydrodealkylation economics remain negative, while toluene disproportionation or TDP and selective TDP economics have weakened further, with estimated TDP economics near breakeven levels, CMA said.
Moreover, South Korean producers are facing a challenging environment with eroding aromatics margins due to recent declines in paraxylene and benzene prices. As a result, these producers may lower reformer and aromatics production in October while integrated refiners may continue to utilize reformate in the gasoline pool due to higher netbacks compared to aromatics extraction, CMA added.
Meanwhile, persistent oversupply continues to plague the Chinese toluene market. A total of 963,000 mt of new capacities are expected to start up in 2025, among which Wanhua Chemical Group’s 70,000 mt/year plant in Yantai, Cnooc Ningbo Daxie Petrochemical’s 300,000 mt/year plant in Ningbo and ExxonMobil (Huizhou) Chemical Co’s 110,000 mt plant in Huizhou started up earlier this year.
Even though market participants expect the restart of remaining new toluene capacities to be delayed until 2026, this offers virtually no relief for the severe glut plaguing the Chinese market. Consequently, China has maintained aggressive competition with South Korean producers by continuing to export its substantial toluene surplus; according to OPIS and China customs data, the country’s toluene exports in August surged by 20.2% month on month to 79,587 mt, the second-highest monthly volume of 2025 after the record peak of 93,346 mt achieved in February.
The end of the annual maintenance season in Asia could further contribute to a looming glut in Q4. In China, Dalian Fujia Dahua Petrochemical’s 360,000 mt/year plant in Dalian is expected to restart in late October and PetroChina Fushun Petrochemical Co’s 146,000 mt/year plant in Fushun is expected to restart in early October, while Fujian Fuhaichuang Petroleum Chemical Industry Co’s 486,000 mt/year plant in Zhangzhou restarted in mid-September.
In South Korea, Hanwha TotalEnergies Petrochemical Co’s 580,000 mt/year toluene plant in Seosan restarted in end-September after 50 days of maintenance. In Southeast Asia, Petronas Chemicals Aromatic is expected to restart its 160,000 mt/year plant in Kerteh in mid-October, and ExxonMobil Asia Pacific is expected to restart its 300,000 mt/year plant in Singapore in October following a maintenance shutdown in August.
Although a few notable regional plants are scheduled for maintenance in Q4, including LG Chemical’s 131,000 mt/year facility in Seosan, Sinopec Guangzhou Co’s 40,000 mt/year plant in Guangzhou, Lotte Chemical Titan’s 49,000 mt/year unit in Pasir Gudang, and PTT Global Chemical Public Company’s 320,000 mt/year operation in Map Ta Phut, these shutdowns are collectively expected to have only a limited impact on overall toluene supply.
–Reporting by Serena Seng, sseng@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com