US spot toluene, spot MX narrow on upstream stability

Jessie Waldheim

04-Sep-2015

HOUSTON (ICIS)–US spot toluene and US spot mixed xylene (MX) prices narrowed on Friday as upstream crude oil stabilised.

Toluene and MX prices had remained strong during the US summer months on demand for the aromatic as an octane booster in summer fuels. Both aromatics had remained above $3/gal for much of June and July. However, as blenders switch to winter fuels, which can use cheaper octane boosters like butane, toluene and MX values declined throughout August.

Toluene and MX have been under additional pressure from declines in upstream crude oil futures, which have been dropping since July. West Texas Intermediate (WTI) crude oil futures last week dropped below $40/bbl.

Despite a late week recovery, the upstream volatility caused uncertainty in aromatics markets. However, crude oil became less volatile this week and posted week-on-week gains for the second consecutive week.

While upstream crude oil futures returned nearly to July levels, toluene and MX prices are down an average of 90 cents/gal from late July as refiners continue to move towards winter fuel blends.

Spot toluene was assessed at $1.90-1.98/gal FOB (free on board), compared with $1.90-2.10/gal FOB a week ago. Spot MX was assessed at $2.09-2.11/gal FOB, compared with $1.98-2.15/gal FOB a week ago.

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