US toluene blend value gains in H1 May amid wider regrade values, limited supply

Houston — Toluene's blend values in the US moved notably higher during the first half of May on the back of stronger regrade values, S&P Global Platts data showed.

Toluene's blend value has risen just over 55 cents since the beginning of the month, last estimated at just over 144 cents/gal. Regrade, the spread between regular and premium gasolines, widened to 19.41 cents with gains in premium grades outpacing unleaded 87, S&P Global Platts data showed.

The stronger blend values will lend support to pricing at a time when supply constraints are providing more support to pricing than demand. Chemical demand has been mostly absent this month as toluene price continue to hold a premium to benzene pricing. Accordingly, STDP margins have moved in negative territory and were last estimated at near minus $33/mt.

Toluene availability has been curtailed on the back of lower refinery run rates with US refiners cutting rates throughout most of Q1 and Q2. Refinery utilization rates in the US were last estimated at 67.9% for the week ended May 8, EIA data showed. The lower run rates have spilled over to the reformer and have resulted in lower aromatic output, multiple sources have said. Assuming a total toluene capacity via reformers of 4.8 million mt, a 10% reduction in run rates equates to roughly 40,000 mt of toluene taken out of the market monthly.

In addition to decreased availability, US spot toluene prices have also seen some support from stronger reformate pricing. Reformate pricing on a DDP basis has risen 25.72 cents since May 1 and were last assessed at 121.26 cents/gal, S&P Global Platts data showed.