Annual analysis of toluene trend in 2020

Toluene price trend in 2020


ferric sulfate (Poly ferric sulphate)

In 2020, the price of toluene will fall in a cliff like manner, and then fluctuate in a weak position, with a slight increase at the end of the year. On January 1, 2020, the average price of toluene was 5470 yuan / ton, and on December 31, 2020, the average price of toluene was 3730 yuan / ton, which was 1740 yuan / ton lower than that of 2020, a decrease of 31.81%


In 2019, the lowest average price of toluene appeared on January 2, with a price of 4450 yuan / ton; in 2020, the lowest price of toluene appeared from April 3 to April 6, with a price of 3050 yuan / ton, which was 1400 yuan / ton lower than that in 19 years, with a decrease of 31.46%. In 2019, the highest price of toluene is 6610 yuan / ton on September 25; in 2020, the highest price is 5610 yuan / ton on January 10-13, which is a decrease of 1000 yuan / ton or 15.13% compared with that in 19 years. In 2020, the price difference between the highest price and the lowest price of pure benzene is 2560 yuan / ton, and in 2019, the price difference between the highest price and the lowest price of pure benzene is 2160 yuan / ton.


Precipice style decline, price nearly “cut back”:


From the beginning of January to the beginning of April in 2020, the price of toluene will drop precipitously, and the price will be almost cut off.


At the beginning of the Spring Festival, due to the weak seasonal demand and the coming of the Spring Festival, the stock price of toluene before the year rose to the highest point in the year, and then began to soften slightly to the end of January.


After the festival, the price of toluene fell precipitously, and the price was almost cut off. With the outbreak of the domestic epidemic, the national transportation has stagnated, the consumption of gasoline has fallen precipitously, the storage of refined oil has accumulated, and the demand for toluene oil transfer has seriously shrunk. In addition, the process of domestic enterprises returning to work and production is slow, and the starting load of toluene downstream has dropped to the freezing point, so the overall demand is weak. At this time, a number of toluene refineries shut down or reduced load operation, supply pressure gradually reduced. During the Spring Festival, the amount of toluene arriving in Hong Kong is small, and the enterprise inventory itself is at a low level before the Spring Festival, so the increase of toluene inventory is small.


In terms of crude oil, initially affected by the domestic epidemic, Brent crude oil fell to US $56.62/barrel and WTI crude oil fell to US $51.56/barrel due to concerns about the decline of China’s fuel demand and economic repression. With China’s epidemic under control and OPEC + production cut, oil prices experienced a brief rebound. However, the good news did not last long. In March, OPEC + production reduction agreement negotiations broke down, Saudi Arabia, Russia and other oil producing countries launched price wars, and crude oil fell sharply. In the first quarter of 2020, Brent oil prices fell by more than 70%, while WTI oil prices fell by nearly 60%.


Brent oil price


WTI oil price


In terms of refined oil, affected by the epidemic, transportation is limited, and gasoline and diesel stocks have accumulated. Combined with the impact of low crude oil prices, gasoline fell by more than 25% from January to March, while diesel fell by more than 20%. The price of toluene dropped from 5510 yuan / ton at the end of January to 3050 yuan / ton.


Gasoline price:


Diesel price


Weak demand and price deadlock


With the gradual improvement of China’s epidemic situation, the oil price rebounded, and the downstream also recovered to a certain extent; in addition, the foreign toluene market was less affected by the epidemic situation, and the toluene price in Europe and America was higher than that in Asia, which led to the opening of Asia US arbitrage window. Domestic enterprises returned to work and production, gasoline demand has increased greatly, coupled with the lack of early inventory accumulation, toluene ushered in a wave of rebound in April.


But the good times are not long. The outbreak of epidemic situation in foreign countries has dealt a great blow to the economy of many countries. The price war between oil producing countries has worsened the oil price, caused a sharp drop in crude oil, and seriously reduced the demand for energy and chemical products. The price of toluene in Europe and the United States dropped sharply. At this time, the domestic economy gradually recovered, the price of toluene rebounded, the internal and external market surplus, the import volume of toluene gradually increased, the inventory accumulated, and the market supply pressure increased day by day. The downstream demand is weak, inventory pressure is prominent, and the price of toluene has entered a stalemate stage in mid April and early April after rebounding from bottom hunting.


Cost side: after April, with OPEC + reaching a large-scale production reduction agreement, the superposed epidemic situation has improved, the demand for crude oil has increased, and the international oil price has begun to rise. The period from August to October is relatively stable. Supply side: the internal and external market surplus, toluene imports increased, inventory high difficult to consume. Demand side: the demand for downstream oil transfer, TDI, PX, etc. continued to be low, while the demand for downstream goods remained rigid, and the demand for toluene continued to be insufficient. There is no sign of improvement in the downstream demand of toluene during the “golden nine silver ten” period.


Brent oil price


WTI oil price


Unexpected slight increase at the end of the year:


Compared with previous years, November to December is the traditional off-season. In November, due to seasonal factors, the demand for refined oil weakened, which led to the weakening of toluene demand. However, in November 2020, driven by the sharp rebound of oil prices, chemicals have a significant rebound, and toluene has a slight rise following the trend.


In terms of crude oil, there was a major breakthrough in foreign new vaccines in early November. The dust of the US election was settled. In addition, OPEC + continued to push forward the production reduction agreement, and oil prices opened an upward channel. From November to December, Brent rose by more than 35% and WTI rose by more than 30%.


Brent oil price


WTI oil price


In terms of refined oil, the overall price of gasoline showed a fluctuating upward trend after April, and rose to the highest point since late March on December 21, with the price at 5773.17 yuan / ton.


Gasoline price


In December, due to the impact of environmental protection policies, the consumption of benzene in downstream solvents decreased significantly; although the price of refined oil rose, the demand for gasoline blending was general, and the downstream PX and TDI start load were normal, so the demand side remained weak, and toluene ended with a weak decline.


Outlook for 2021:


In 2021, the petrochemical industry will recover as a whole, and the chemical industry will recover as a whole. However, the toluene market is expected to remain weak in the early 2021, and the contradiction between supply and demand is still the main factor restricting the price. In addition, the bad news of the epidemic cannot be eliminated in the short term, and the trend of toluene in 2021 will be under pressure. Toluene analysts of business news agency believe that the trend of toluene in 2021 needs attention: first, look at the supply cost side, the implementation of OPEC + production reduction, the total number of us oil wells and the inventory data of crude oil and refined oil. Second, on the demand side, the impact of the global epidemic on crude oil demand, the recovery progress of downstream industrial chain, and the economic and trade situation in Europe and the United States. Third, look at the geopolitical situation in the Middle East, US dollar index and stock market linkage.

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