07 December 2012 10:31 [Source: ICB]
Toluene is a colourless, mobile liquid with a characteristic sweet, pungent, benzene-like odour. It is an irritant to the eyes, skin, nose and lungs. Toluene is a dangerous fire hazard and can lead to a flashback, thanks to its heavy vapour.
In non-chemical uses, toluene is used in large quantities as an octane booster in gasoline but most of that portion remains in the refinery streams.
There are three grades of toluene: TDI grade, nitration-grade and commercial-grade. TDI grade is 99+% purity and nitration grade is at 98.5-100%.
SUPPLY AND DEMAND
The US is a net importer of toluene. Supply is typically strong in March and April for gasoline blendstocks, such as toluene and xylene. This demand comes as refiners prepare for the US summer driving season.
Toluene barge spot prices can typically follow price direction from benzene. Energy futures, such as NYMEX WTI crude and RBOB gasoline can also influence price direction. Spot activity is usually stronger for nitration-grade toluene, compared with commercial-grade toluene.
The toluene market also trades domestically in the truck and rail market with other aromatics and aliphatic solvents in the Midwest and US Gulf.
Nitration-grade toluene spot prices were volatile in 2012, dipping to yearly lows in late June, but rebounding to record highs in mid-October. Although toluene prices typically follow other aromatics such as benzene and xylene, the record high benzene prices seen in July had little pull on the toluene market.
Toluene prices established record highs in October because of tight supply conditions. Trade sources said the tight supplies were supported by Hurricane Sandy and the second set of record high benzene spot prices during the month.
Meanwhile, demand for commercial-grade toluene remained limited during the year. Commercial-grade toluene prices are typically at a 5 cent/gal discount to nitration-grade toluene prices.
That trend has stayed true for much of 2012 with commercial-grade toluene discussions mostly flat to 10 cents/gal below nitration-grade prices. However, the spread between the two was briefly seen at about 20 cents/gal in February and October.
In the aromatics and aliphatic solvents sector, truck and rail toluene prices followed a similar path as the n-grade toluene market, moving up through the first quarter ahead of the US summer driving season. As demand was fulfilled, toluene prices were down during the summer.
Toluene prices in the Midwest and US Gulf then rebounded in the fourth quarter on tight supply and strong demand.
Toluene occurs naturally at low levels in crude oil, and is usually produced in the processes of making gasoline via a catalytic reformer, in an ethylene cracker or making coke from coal. Final separation, either via distillation or solvent extraction, takes place in one of the many available processes for extraction of the BTX aromatics (benzene, toluene and xylene isomers).
The weak global economy and uncertainty has made it hard for many to gauge a possible outlook for aromatics such as toluene. Unlike the olefins market which is expected to see an increase in capacity from the expected boom in shale gas, there has also been little-to-no discussion regarding aromatics expansion in North America.
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