Introduction: Ongoing friction in the Middle East has had a significant impact on international oil prices, but market participants remain cautious, and price fluctuations have not been fully transmitted to the toluene market.

1. Shandong Toluene Prices Fluctuate Narrowly

During the week, the Shandong toluene market continued to fluctuate within a narrow range. Downstream buyers maintained rigid procurement, showing limited interest in the raw material market. Moreover, as international oil prices continued to fluctuate widely, their influence on toluene prices weakened. Currently, refineries face high feedstock costs, with Yulong Petrochemical, Qicheng Petrochemical, and Xinyue Chemical not offering toluene for external sale. Other refineries are also operating below full capacity. As a result, overall toluene supply remains at a low level, providing strong price support. Although downstream demand is weak, refineries are still able to achieve a balance between production and sales.

2. Toluene-Pure Benzene Price Spread Narrows

This week, the average price spread between pure benzene and toluene in Shandong was 851 CNY/ton, with the HDA process processing profit at 133 CNY/ton. Last week, the average price spread in Shandong was 881 CNY/ton, with the HDA processing profit at 160 CNY/ton. By the end of the week, the gross profit margin for HDA plants in Shandong had fallen below 100 CNY/ton, the lowest profit point since April 12. During the week, HDA plants, pressured by rising costs, reduced their purchasing enthusiasm for toluene, showing clear resistance to high prices.

Export offers for Shandong toluene were active, but their impact on the domestic market price has not yet been felt.

3. Xylene-Toluene Price Spread Widens but Remains Negative

During the week, the average price spread between xylene and toluene in Shandong was 72 CNY/ton, with toluene refineries achieving an average production-to-sales ratio of 107%. Last week, the average spread in Shandong was 125 CNY/ton, with a production-to-sales ratio of 87%. The price spread between xylene and its downstream product PX remains stable, as downstream PX plants have been purchasing in large quantities, supporting xylene prices. However, the toluene industry has seen a clear reduction in supply, providing stronger price support. Consequently, the spread between xylene and toluene has narrowed.

On the news front, rumors regarding reduced operating rates or shutdowns at aromatic complexes have been circulating. At the same time, the second batch of refined oil export quotas for this year has decreased by 0.76% compared to the same period in 2025, drawing close attention from market participants.

4. Market Outlook

Positive factors: Strong cost support; the export window is on the verge of opening.

Negative factors: Very limited consumption from gasoline; weak demand from the fine chemical industry.

Currently, downstream industries such as TDI (toluene diisocyanate) and solvent sectors like coatings and inks are facing insufficient orders, leading to weak purchasing intentions. Buyers are only restocking as needed and are cautious about replenishing inventories. Disproportionation units show limited interest in toluene because the toluene-pure benzene price spread remains less favorable than the xylene-to-PX spread. The impact of export orders is still unclear. Overall demand is unlikely to see a significant recovery, providing little support for prices. Toluene is expected to continue its weak, volatile trend.