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Stronger energy bolsters US aromatics pricing as toluene, MX outpace benzene

Highlights

US aromatics prices posted marked gains Monday amid a surge in energy pricing related to attacks on the Saudi Arabian oil complex over the weekend. Spot toluene prices posted the largest gains, rising just over 9% on the day, with the prompt spot assessment closing at 262 cents/gal.

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After the close of S&P Global Platts assessment process, bids were seen higher for September at 264 cents/gal. Sellers were notably absent and no confirmed trades were reported.

Mixed xylene prices rose alongside toluene and the prompt spot assessment gained 19 cents on the day to close at 258 cents/gal FOB USG.

The gains in both toluene and mixed xylenes were attributed to a surge in RBOB pricing. October RBOB futures gained 19.93 cents to settle at $1.7524/gal.

The gains in toluene and mixed xylenes far outpaced those seen in benzene, where pricing rose just under 4% on the day. Prompt and forward-month benzene prices on a DDP basis rose 11 cents to 269 and 270 cents/gal, respectively.

Liquidity improved, with multiple trades reported for October at 268 and 269 cents/gal, along with a first-half October deal at 270 cents/gal.

Participants anticipated that benzene prices would likely taper off in the coming days, with one source noting that "energy actually went up another dollar in the afternoon, and [there was] no reaction in the market."

Downstream, the impact on styrene was less clear, with participants talking pricing anywhere in the range of $920-$950/mt FOB USG, with a trading source suggesting that $950/mt was on the high side. A second seller noted that he was refraining from offering October material and opted to wait until pricing was a bit more clear.

While aromatics prices gained across the board and the outlook remained unclear, with gains in toluene outpacing those in benzene, it appeared toluene conversion economics would remain negative in the near term. Considering toluene pricing at 264 cents/gal, benzene at 270 cents/gal and paraxylene at $810/mt, STDP margins fell to near minus $35/mt, according to S&P Global Platts estimates. Similarly, near-term shifts in xylene economics for non-integrated producers were not expected as the PX-MX spread shrank to just over $23/mt.

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

-- Edited by Derek Sands, newsdesk@spglobal.com