Executive Summary

During the holiday period, the average production-to-sales ratio of toluene refineries in Shandong reached 172%, with active purchasing from downstream chemical industries. The price spread between toluene and xylene remained at low levels, limiting toluene's entry into the gasoline pool.

1. Toluene Prices in Shandong: Bottoming Out and Rebounded

Table 1: Price Comparison of Shandong Production Enterprises (CNY/ton)

| Enterprise Name | June 18 | June 21 | Change |
| --------------- | ------- | ------- | ------ |
| Dongfang Hualong | 6100 | 6100 | 0 |
| Qicheng Petrochemical | - | - | - |
| Zhenghe Petrochemical | 6200 | 6100 | -100 |
| YouTai Technology | - | - | - |
| Wudi Xinyue | 6153 | 6103 | -50 |
| Dongming Petrochemical | 6150 | 6100 | -50 |
| Yatong Petrochemical | 6150 | 6100 | -50 |
| Dongying Qirun | 6200 | 6103 | -97 |
| Huaxing Petrochemical | 6200 | 6103 | -97 |
| Jingbo Petrochemical | 6250 | 6160 | -90 |
| Yulong Petrochemical | - | - | - |

Data source: chempricehub Information

As international crude oil fell to pre-conflict levels, the bearish sentiment in the toluene market intensified. However, during the holiday period, the Strait of Hormuz was closed again, and combined with the already low price level of toluene and improved negotiation atmosphere for the related product xylene, toluene buying interest increased. Refineries achieved smooth sales, continuous premium auctions, and prior inventories were drawn down.

2. Related Product Prices in Shandong: Slight Increases

Table 2: Price Comparison of Related Products in Shandong (CNY/ton)

| Product Name | June 18 | June 21 | Change |
| ------------ | ------- | ------- | ------ |
| 92# Gasoline | 7906 | 7950 | 44 |
| Toluene | 6175 | 6190 | 15 |
| Xylene | 6150 | 6215 | 65 |
| Mixed Aromatics | 6165 | 6370 | 205 |
| Trimethylbenzene | 6375 | 6375 | 0 |
| MTBE | 5275 | 5450 | 175 |
| Raffinate Oil | 5930 | 6000 | 70 |
| Mixed C5 | 5500 | 5900 | 400 |
| Alkylate | 8250 | 8300 | 50 |

Data source: chempricehub Information

As related gasoline feedstock prices fell to recent lows, buying interest from the gasoline sector increased, providing strong support to the holiday market. Mainstream product prices rose slightly, and the toluene production-to-sales ratio reached 172%. However, current toluene demand primarily comes from the chemical industry, and the window for entering the gasoline pool has not yet opened.

3. International Crude Oil Prices: Strengthening Trend

Table 3: International Crude Oil Price Comparison (USD/barrel)

| Product | June 17 | June 19 | Change |
| ------- | ------- | ------- | ------ |
| WTI | 76.79 | - | - |
| Brent | 79.55 | 80.57 | 1.02 |

Data source: chempricehub Information

Despite the completion of the U.S.-Iran memorandum of understanding, tensions in the Middle East have resurfaced, increasing market concerns.

4. International Market Performance: Moderate

Table 4: International Related Product Price Comparison (USD/ton)

| Product Name | Price Type | June 17 | June 19 | Change |
| ------------ | ---------- | ------- | ------- | ------ |
| Naphtha | CFR Japan | 673.75 | 676.5 | 2.75 |
| Toluene | FOB Korea | 859 | 851 | -8 |
| Xylene | FOB Korea | 874.5 | 895.5 | 21 |
| Benzene | FOB Korea | 876 | 873.67 | -2.33 |
| PX | CFR China | 1040.33 | 1058.33 | 18 |
| SM | FOB Korea | 1055 | 1048 | -7 |
| MTBE | FOB Singapore | 749.81 | 762.56 | 12.75 |

Data source: chempricehub Information

Due to unstable external circumstances and the Chinese market being on holiday, the price fluctuations of international aromatic products were limited by external sentiment, with their own supply-demand dynamics having a more pronounced impact. In May, China's toluene exports reached 130,000 tons, up 55% month-on-month and 122% year-on-year. Benzene imports totaled 235,000 tons, down 47% month-on-month and 18% year-on-year.

5. Forecast

Although the U.S.-Iran memorandum of understanding has been signed and the Strait of Hormuz will gradually reopen, supply recovery will take time. The recent decline in international crude oil prices is more attributable to the release of market sentiment. The current supply-demand structure of the toluene market has not yet changed. Therefore, the trading range of the toluene market will closely follow the oil price fluctuation band. As oil prices have fallen to early-March levels, toluene will also fluctuate within correspondingly low ranges. Market participants should cautiously monitor cost changes.