Aromatics market remains volatile

Recently, S&P Global Commodity Insights released the aromatics market report
.
S&P Global said the global aromatics market is expected to remain volatile along with energy commodities for the remainder of 2022, as aromatics are widely used as feedstocks for petrochemical production and gasoline blending components
.

Strong demand for gasoline blending has boosted aromatics value chain prices in recent months, while supplies of aromatics from reformate and steam cracking have generally been weak, according to S&P Global
.
As an important blending agent, global aromatics prices generally follow gasoline prices, S&P Global said
.
Gasoline demand has been strong in Europe and the United States so far this year, and gasoline prices have continued to rise
.
However, when the price difference between naphtha and gasoline becomes larger, gasoline blenders use naphtha to blend gasoline
.
Due to the lower octane rating of naphtha, gasoline blenders require more high-octane components such as methyl tert-butyl ether, toluene, xylene, reformate and pyrolysis gasoline to maintain gasoline specifications
.
The result is that refiners reduce the refining of individual aromatics such as para-benzene and para-xylene, sending the aromatic-rich fraction directly to the gasoline blending tank
.
Finally, S&P Global observed that at the end of June, S&P Global Aromatics prices turned lower from their early June highs
.

In addition, benzene market prices in all regions have now turned to the downside, and styrene continues to be bearish, with the global average price falling by $76/t in June
.
The outlook for the Asian benzene market will also be bearish for the rest of the year as demand remains below supply
.
September will be a key monitoring month as gasoline blending activity typically begins to slow seasonally, the report said
.
On July 4, the free-on-board (FOB) price of pure benzene in South Korea was $1,230.
67 per ton
.

In toluene and xylenes, S&P Global said that in Europe, strong demand for toluene and mixed xylenes from gasoline blenders will not subside for at least the next few weeks
.
But there is also news that gasoline blenders' interest in buying toluene and xylene will be limited to immediate delivery cargoes amid a high degree of uncertainty and volatility in the market
.
Supply and demand fundamentals remain largely unchanged, the sources said
.
In Asia, the olefins and aromatics sectors are mostly seeing slowing demand and weak fundamentals, adding to pessimism
.
The isomer-blended xylene outlook in Asia has turned bearish, with traders expecting weaker demand and prices, the end of the typical gasoline demand season and the fading possibility of arbitrage into the U.
S.
, the report said
.
Allegedly, while the price difference to other regions is still large, the shipping time is long and the risk is high
.
Spot demand for gasoline octane blending remains strong due to limited aromatics production, and o-xylene supply in Asia remains tight, the report added
.

Also, according to industry sources, buying sentiment among Asian toluene disproportionation (TDP) and selective toluene disproportionation (STDP) users is more cautious
.
According to S&P Global data, on July 1, the price difference between pure benzene and toluene in Asia was $30.
67 per ton
.
The last time the spread was this low was in October 2020
.
Data show that on July 1, the price difference between paraxylene and toluene was $20.
33 per ton
.
S&P Global said stronger global chemical demand for toluene and gasoline blending demand is expected to boost prices in the second half of 2022
.