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US toluene sees support from chemical demand, supply constraints

Houston — US toluene demand continued to see support this week from toluene conversion margins and supply constraints as prices continued to inch higher, with Friday's assessment being at 221 cents/gal FOB USG.

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Sources said that disproportionation margins, specifically MSTDP margins, remained healthy and were a factor in keeping toluene prices firm. With the US paraxylene contract at 50 cents/lb and considering the February benzene price of 193 cents/gal, MSTDP margins were last estimated at near $211/mt.

Sources anticipated that margins could remain strong in the foreseeable future on the back of stronger paraxylene pricing in Asia and associated demand in the US. The Platts CFR Taiwan paraxylene marker for April finished the week at $1,102/mt and sources said that a near $600/mt spread between Asian paraxylene prices and naphtha translated to strong regional demand for paraxylene. Accordingly, US export demand for paraxylene was characterized as healthy too.

MSTDP margins could potentially find support if benzene's demand improves in Q2 amid restarts in the downstream styrene segment in the US. However, there was some uncertainty given planned maintenance in Asia and general market length.

While demand from the chemical segment remained strong, sources said that demand from the solvent segment continued to lag and noted the absence of blenders. Demand from blenders was expected to increase in Q1 but that is yet to materialize.

Sources said that production issues in the US Gulf had curtailed supply, with at least two refiners being in maintenance. ExxonMobil was heard to be undertaking planned maintenance at its 643,000 mt/year reformer at Baytown, while Total was in the middle of planned works at its Port Arthur facility. Total has an estimated toluene capacity of 353,000 mt/year.

Additionally, styrene producer Americas Styrenics was undergoing maintenance at its St James, Louisiana, facility, shutting its 41,000 mt/year capacity.

Sources also noted that the market saw some support amid interest from exporters who were looking to potentially move material to the Europe and the Mediterranean.

--Kevin Allen, kevin.allen@spglobal.com

--Edited by Pankti Mehta, pankti.mehta1@spglobal.com

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