Toluene xylene: 2022 milestones

Toluene xylene: 2022 milestones

1. Armed conflict breaks out between Ukraine and Russia, triggering energy crisis

February 24, Russia and Ukraine officially broke out war, domestic and foreign financial, commodities and other markets shake, international crude oil prices WTI futures from 92 U.S. dollars / ton near, soaring to 130 U.S. dollars / barrel. Petrochemical companies have raised their offers, toluene market by its impact, the market price quickly surged higher. With the continuation of the war between the two sides, the West for Russia sanctions intensified, thus triggering the energy crisis, for the international crude oil prices continue to be located at high levels laid the foundation, but also for the two benzene market to provide some support.

2. Excess toluene was consumed and exports became the industry's new favourite

As the domestic supply growth rate is very obvious, while the demand side growth rate is relatively slow, the toluene industry has become a trend from net import to net export. 2017 years ago toluene products export volume is basically negligible; 2018 years began, China's toluene exports rose significantly, 2019 China's toluene exports than 2018 growth ratio of more than 100% to 37,000 tons; 2020 continue to Maintain more than 100% growth ratio to reach 75,000 tons. 2021 China toluene exports of 96,700 tons. 2022 1 quarter toluene exports of 3.5 into tons, 2 quarter toluene exports of about 214,500 tons, the domestic supply of excess volume was significantly consumed.

3. domestic new crown epidemic, domestic economic growth under pressure, downstream fine chemicals and gasoline demand decline

In 2022, the domestic new crown virus epidemic showed the characteristics of multiple, distributed, resulting in local transportation disruptions, toluene source circulation difficulties, etc., at the same time, by its impact, travel traffic also got some hindrance, resulting in gasoline consumption weakened, in addition, by the impact of the epidemic, the domestic economic growth rate declined, the end consumption reduced, resulting in the demand for fine chemical products weakened, so under the heavy negative In addition, the domestic economic growth rate decreased due to the epidemic, resulting in lower end consumption and thus weaker demand for fine chemical products.

4. US gasoline raw material demand is strong, Asia-US arbitrage window opened

In May, the US aromatics opened a sharp rise in the road to the end of June, toluene FOB US Gulf rose by 51.07%. The main reasons for this are, firstly, that gasoline stocks in the region have been at a low level for a long time and the amount of gasoline available for circulation is lower than in the same period of previous years. Secondly, the export of gasoline and toluene to Canada and other neighboring regions increased by 1-2 million tonnes/month compared to previous years. Third, gasoline demand is expected to be stronger with the onset of the summer travel peak season. Fourth, local refineries are under prominent cost pressure due to high crude oil prices, so refinery unit loadings fell to 90% and aromatics unit loadings fell to 85-87%.

5. Frequent interest rate hikes by the Federal Reserve during the year, deepening global recession

In 2022, affected by the energy crisis, the new crown virus epidemic and other factors, the US domestic inflationary pressure was greater, in response to which the Federal Reserve raised interest rates several times during the year, respectively by 25 basis points in March, 50 basis points in May and 75 basis points in June. Among them, the 75 basis point rate hike in June was the largest single rate hike since November 1994. With the frequent rate hikes by the Fed, exchange rates fell sharply in many countries, which in turn triggered a global recession.

6. Export volume of 109,500 tonnes in August, a record high

China exported 109,501.764 tonnes of toluene in August, of which 11,844.034 tonnes were exported to Malaysia and 46,501.173 tonnes to Singapore, mainly due to good demand for gasoline blending in Southeast Asia and the opening of the arbitrage window, which supported a large amount of toluene exports. In addition, the export volume in June was 103,740.189 tonnes, in July 102,091.405 tonnes and in August 109,501.764 tonnes. The main reason for the export volume above 100,000 tonnes for three consecutive months was the demand from the gasoline industry. With August exports reaching a record high.