SunSirs: Crude Oil Prices Declined, Supply Increased, and Toluene Market Declined

https://www.chemnet.com   Aug 06,2024 SunSirs

Price trend

According to the Commodity Market Analysis System of SunSirs, the overall toluene market had been declining recently (7.26-8.5). On July 26th, the benchmark price of toluene was 7,510 RMB/ton, and on August 5th, the benchmark price of toluene was 7,300 RMB/ton, a decrease of 2.8% during the period. During this period, the toluene market operated weakly, with market prices fluctuating downwards. The decline in crude oil prices during the week had dragged down market sentiment, and the overall market atmosphere was bearish. On the supply side, with the increase of port cargo, the supply was relatively loose, which affected the bearish market atmosphere. The overall demand was weak, but with the downward trend in prices, there was some downstream demand to replenish inventory at low prices. As of August 5th, the mainstream price range in East China was between 7,300-7,350 RMB/ton, a cumulative decrease of 50-100 RMB/ton compared to last week.

Analysis review

Cost side: Due to the escalating geopolitical tensions, investors were concerned about the escalation of the Middle East conflict; The significant decrease in US crude oil inventories had provided support for oil prices. As of August 1st, the settlement price of the main contract for WTI crude oil futures in the United States was 76.31 US dollars per barrel. The settlement price of the main Brent crude oil futures contract was 79.52 US dollars per barrel. The crude oil analyst of SunSirs believes that in the short term, the situation facing crude oil is very complex, and crude oil may intensify its volatility. As of August 5th, it is necessary to pay attention to further developments in the Middle East situation, as the tense situation may continue to push up the risk premium of crude oil. At the same time, the expectation of the Federal Reserve cutting interest rates has also brought certain benefits to demand, and oil prices may continue to seek upward space. In the medium to long term, the supply uncertainty in the oil market is increasing, especially with the upcoming US presidential election. If the Republican Party wins, it may have a more profound impact on the oil market, and US crude oil production may be subject to policy increases. The future game of crude oil supply and demand may seek a rebalancing.

Supply side: Sinopec's toluene quotations generally decreased this week, but there were slight differences in the degree of adjustment among different underground sources. The company was operating normally, with stable equipment production and many products for personal use, resulting in stable production and sales. Among them, the East China Company quoted 7,200 RMB/ton, the North China Company quoted 7,350 RMB/ton, the South China Company quoted 7,300-7,350 RMB/ton, and the Central China Company quoted 7,200 RMB/ton.

Demand side: The external market for xylene continued to decline, and the rigid demand support for toluene was relatively weak

On August 5th, Sinopec Sales Company temporarily stabilized the price of xylene, with the current execution price being 8,500 RMB/ton. This price was implemented in East China, North China, Central China, and South China. Yangzi Petrochemical, Zhenhai Petrochemical and other units are operating stably and selling normally. As of August 2nd, CFR China's closing price was 1,005.33 US dollars/ton, a decrease of 3.34 US dollars/ton from last week.

On Friday (August 2nd), the Asian toluene market closed with mixed gains and losses, with the FOB South Korean closing price of 886-888 US dollars/ton in August rising by 6 US dollars/ton; The closing price of CFR China in August was 884-886 US dollars per ton, a decrease of 6 US dollars per ton.

Market outlook

The recent trend of crude oil on the cost side was weak, and the support on the cost side was weak. In terms of supply, the port cargo had slightly increased recently, and the supply was relatively loose. On the demand side, with the decline in market prices, some downstream enterprises had certain purchasing needs, and market trading was more active than before, which still provided some support for market sentiment. Overall, the toluene market was mixed with negative and positive factors, and it is expected that the market will mainly experience narrow fluctuations in the short term, with a focus on the operation of key downstream facilities in the future.

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