US aromatics prices hit multiyear lows as crude tumbles on coronavirus fears, Saudi price cut

US aromatics prices posted sharp declines to open the week and hit multiyear lows Monday amid a notable drop in energy prices.

Prompt spot toluene prices fell 38 cents on Monday to close at 188 cents/gal. This would mark the lowest level since November 9, 2016, when the price was assessed at the same level, S&P Global Platts data showed.

Similar dynamics were seen in the US mixed xylene market where prices shed 36 cents on the day to close at 190 cents/gal FOB USG, the lowest level since prices were assessed at 186 cents/gal back on December 28, 2018.

Prices saw significant pressure on multiple fronts with the two most significant factors being the impact of the coronavirus outbreak and lower energy prices.

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Fears related to the coronavirus have pushed both energy and aromatics pricing lower and RBOB futures were down roughly 34 cents since the beginning of February.

During that same time, toluene and mixed xylene prices were down 56 and 54 cents/gal, respectively.

The lion's share of those declines were seen Monday as RBOB futures fell 25.21 cents on the day to settle at $1.1369/gal.

The declines in energy came as Saudi Arabia announced that it would slash pricing on its April output in response to the failure of OPEC and Russia to agree on production rate cuts.

Subsequently, WTI futures fell $10.15/barrel on Monday to settle at $31.13 and the energy complex as a whole followed.

Prices are unlikely to rebound in the near-term with both the coronavirus and the Saudi-Russian price war expected to continue in the near term, sources said.

Aromatics pricing was expected to remain under pressure as demand had been soft prior to Monday's declines in energy.

Sources noted that chemical demand was soft for toluene due to weaker paraxylene.

Length in the global paraxylene market has kept pricing depressed and dented STDP margins as sources have said that unit operators are likely running at near 50%.

Weaker paraxylene was also responsible for soft chemical demand for mixed xylenes as a narrow spread between the products meant the producer economics for crystallization units were not viable.

Furthermore, demand from the octane segment was heard soft as spot values held a notable premium to blend values leading up to Monday.