【Introduction】 Tensions in the Middle East have escalated once again, driving international oil prices to oscillate upwards. While this has had some impact on market sentiment, it has yet to be reflected in market prices. Currently, crude oil costs for Shandong refineries remain high, demand is moderate, and refineries continue to maintain low inventories while actively pursuing sales.

1. Shandong Toluene Prices Fluctuate Narrowly

During the week, international oil prices rose in a volatile manner, exerting a positive influence on the commodity market. However, downstream buyers continued to make spot purchases based on immediate demand, weakening the impact of crude oil on Shandong's toluene prices. Currently, the circulation volume of toluene in the Shandong market remains at a relatively low level. The supply of toluene from Yulong Petrochemical, Qicheng Petrochemical, and Xinyue Chemical to the market is very limited. This supply contraction supports the strengthening of toluene prices in the Shandong region.

2. Toluene-Benzene Price Spread Narrows

This week, the average price spread between pure benzene and toluene in the Shandong region was 913 RMB/ton, with the HDA process processing profit at 180 RMB/ton. Last week, the average price spread was 1121 RMB/ton, with the HDA processing profit at 350 RMB/ton. On Tuesday, the gross profit of HDA enterprises in the Shandong region fell to around 149 RMB/ton, the lowest profit point since April 12th. While HDA factories maintained stable purchasing during the week, their aversion to high toluene prices intensified due to compressed profit margins.

Although disproportionation plants did engage in some purchasing, the volume was too small to impact the toluene market. Toluene export offers from the Shandong region were active, but the external market sentiment was weak, and no transactions have been reported yet.

3. Xylene-Toluene Price Spread Recovers

This week, the average price spread between xylene and toluene in the Shandong region was 145 RMB/ton, with toluene refineries' average production-to-sales ratio at 100%. Last week, the average price spread was 83 RMB/ton, with the average production-to-sales ratio at 102%. Although the price spread between xylene and downstream PX has narrowed, it remains at a high level. Significant purchasing by downstream PX enterprises supported premiums in xylene auctions, leading to some recovery in the xylene-toluene price spread.

On the news front, reports regarding capacity reductions at local refineries and potential shutdowns at some plants have been circulating, attracting market attention. However, no new plant shutdown plans have been announced yet, so market participants remain cautious.

4. Market Outlook

Positive Factors: Cost-side support remains firm; downstream benzene consumers demonstrate stable consumption.
Negative Factors: Gasoline consumption is very limited; demand from the fine chemical industry is weak, and export negotiations have decreased.

Currently, the supply of toluene truckloads in the Shandong region is shrinking. However, with the export window closed, there is still sales pressure within the region, creating significant upward price resistance. The main positive support within the region comes from low refinery inventories. With both supply and demand weak and downstream purchasing sentiment average, the toluene market is expected to maintain a narrow fluctuation range in the short term.