As of September 2024, the North American toluene market is experiencing a decline in prices due to several compounding factors. Rising production costs, fluctuating demand, and ongoing supply chain disruptions have created a challenging environment for key consumers such as Toluene Diisocyanate and phenol, which are facing weak local demand [a0f26c3a].
The influence of OPEC on crude oil markets is diminishing, complicating the pricing landscape. Recent economic indicators have shown an increase in unemployment claims and weak manufacturing performance, contributing to the overall bearish sentiment in the market [a0f26c3a].
Adding to the turmoil, Hurricane Francine, a Category 2 storm, has caused significant disruptions in Louisiana, leading to plant shutdowns. The Bureau of Safety and Environmental Enforcement (BSEE) reported that 38% of U.S. oil production and 48% of natural gas production in the Gulf of Mexico has been shut down due to the storm's impact, with operations at the Port of New Orleans also suspended [a0f26c3a].
In parallel, U.S. Diethylene Glycol (DEG) prices remained steady in early September, with a slight week-on-week increase. However, weak downstream demand and rising feedstock costs have influenced pricing. Ethylene Oxide (EO) prices rose by 1.3% due to increased Ethylene prices and hurricane disruptions [d29d3fd3].
Global crude oil prices hit a low of USD 68.58 per barrel on September 6, 2024, down USD 5.94 from the previous week, which has further complicated market dynamics [d29d3fd3]. Demand for DEG has been subdued, particularly in resin manufacturing, with limited consumption in paints and coatings. Supply has been impacted by tight inventory levels and shutdowns of chemical plants due to Hurricane Francine, with major companies like Nan Ya Plastics Corporation and BASF halting operations in Texas and Louisiana respectively [d29d3fd3].
Despite these challenges, there are expectations that toluene prices will fluctuate but remain stable with only minor adjustments anticipated. The construction and coatings sectors may see improvements, and capacity growth is projected through 2024 and into 2025, which could provide some relief to the market [a0f26c3a]. Meanwhile, ChemAnalyst predicts potential further increases in DEG prices due to supply shortages and an expected demand rebound [d29d3fd3].