According to SunSirs' commodity market analysis system: In 2025, the average price of toluene in the domestic market was 6,050 RMB/ton at the beginning of the year and 5,130 RMB/ton at the end of the year, representing an annual decrease of 15.21%. The toluene market in 2025 saw a rise to a high point at the beginning of the year, followed by a fluctuating decline. The overall trend was weak, basically divided into two stages: range-bound fluctuations in the first half of the year, and a continuous decline in the second half.

According to data from SunSirs, the toluene market in 2025 saw more declines than increases, with upward trends in 4 months and downward trends in 7 months. The highest increase was 10.97% in June, while the largest decrease was 15.21% in December.

Toluene Market Review for 2025

First half of the year: After rising to a high point at the beginning of the year, prices declined, resulting in a range-bound fluctuation with a net increase of 0.33%

From January to June 2025, the toluene market rose to its highest point of the year at the beginning of the year before declining, then rebounded in June. Overall, the first half of the year showed a range-bound fluctuating trend, with a net increase of only 0.33%.

Cost side: From January to May, the international crude oil market experienced an oversupply, and Brent crude oil prices fluctuated downwards from $82/barrel at the beginning of the year to a low of $60/barrel in May, leading to a simultaneous weakening of naphtha prices and continuously weakening cost support for toluene. After June, due to geopolitical conflicts in the Middle East, crude oil prices surged to $79/barrel before falling back, and naphtha prices followed suit, providing temporary cost support for the toluene market.

Supply side: In the first half of the year, major domestic refining and chemical enterprises operated at full capacity, and the increase in toluene supply continued to be released; although port inventories in East China fluctuated, there was no significant destocking trend overall, and supply-side pressure persisted. After March and April, maintenance shutdowns at some domestic facilities, and the concentrated maintenance of Shandong refineries in June, temporarily reduced market supply, somewhat alleviating the pressure of oversupply. Overall, the supply side showed a weak-to-strong trend in the first half of the year.

Demand Side: Downstream disproportionation industries generally saw mediocre profits in the first half of the year. While the demand for toluene remained stable, there was a lack of incremental support. The oil blending industry experienced a temporary boost due to inventory building for the US gasoline peak season, but the overall impact was limited. The export market showed a trend of high in the first half and low in the second half of the year. From January to April, export orders steadily increased due to overseas plant maintenance, while in May and June, export volumes declined month-on-month, especially in June, when exports were only 44,900 tons, a decrease of 23.2% compared to the previous month, weakening the impact on domestic market demand. In April and May, due to the continuous decline in toluene prices and pessimistic market sentiment, downstream buyers were reluctant to purchase at high prices, weakening demand support and pushing prices to their lowest point of the year. In June, with cost rebound and supply tightening, demand followed suit, driving a market recovery.

Overall, the toluene market in the first half of 2025 was dominated by significant fluctuations in costs.  The combined effects of phased adjustments in supply and divergent performance in demand, although leading to a recovery and rebound in June, failed to alter the overall volatile downward trend observed in the first half of the year.

Second half of the year: Both supply and demand were weak, leading to a drop to a five-year low

In the second half of 2025, the toluene market experienced volatile downward trends, with continued weakness in the third quarter and a short-term rebound in the fourth quarter, resulting in a cumulative decline of 11.86%.

Cost side: In the third quarter, the international crude oil market was affected by the weak global economic recovery and the less-than-expected implementation of OPEC+ production cuts, resulting in a continued loose supply and demand situation. Brent crude oil prices fell from $66/barrel to a low of $58/barrel in September, and naphtha prices weakened accordingly, leading to a continuous weakening of toluene cost support. Entering the fourth quarter, renewed geopolitical tensions in the Middle East, coupled with the arrival of the peak season for crude oil demand in the Northern Hemisphere winter, led to a rapid rebound in crude oil prices to $72/barrel. The naphtha market followed suit with a significant increase, and the cost support for toluene shifted from weak to strong, laying the foundation for price recovery.

Supply side: From July to September, domestic plants maintained full-capacity production, leading to a rebound in toluene output. Coupled with the continued opening of import windows in the third quarter, toluene imports increased by 15% month-on-month, and inventories at East China ports climbed to a high of 420,000 tons, significantly increasing supply pressure. From October onwards, refineries in many parts of China entered their annual maintenance period, causing the operating rate of aromatic hydrocarbon plants to fall to 62%. This, combined with a 20% month-on-month decrease in imports due to maintenance at overseas plants, shifted the market supply from a surplus to a tight balance. Port inventories rapidly decreased to below 300,000 tons, significantly easing supply pressure. Overall, the supply situation in the second half of the year showed a pattern of initial looseness followed by tightness.

Demand side: In the third quarter, the operating rate of the disproportionation industry remained at a low level of 60%, leading to weakened demand for toluene. The oil blending industry also experienced weak demand due to the small price difference between toluene and gasoline. Under these dual negative factors, toluene prices fell rapidly in September. In the fourth quarter, with the recovery of costs and tightening supply, the operating rate of the disproportionation industry rebounded, and procurement volume increased. At the same time, the peak season for oil blending demand in the United States arrived, driving a 25% month-on-month increase in toluene export orders.  The demand side support significantly strengthened, driving a steady recovery in prices.

Overall, the toluene market in the second half of 2025 will be dominated by significant fluctuations in costs. The combined effects of seasonal adjustments in supply and phased improvements in demand will lead to a continued weakening trend in the third quarter under a weak supply and demand pattern. The fourth quarter will see a rebound driven by cost increases and a tighter supply-demand balance, but the overall trend will still be one of volatile decline.

Industrial chain structure

Toluene is an important organic chemical raw material. Toluene production mainly occurs through two routes: petroleum refining and coal chemical processing. In petroleum refining, it is primarily obtained by hydrogenating and extracting toluene from crude benzene produced by the fractional distillation of coal tar; in coal chemical processing, it is obtained by extracting toluene from naphtha after catalytic cracking.

The main downstream products of toluene include TDI, benzoic acid, phenol, caprolactam, and PTA. It has a wide range of applications, including blending with gasoline to improve octane rating, and the production of various toluene derivatives such as p-xylene, o-xylene, and benzyl alcohol.  Its end-use applications span industries such as petrochemicals, fuels, pesticides, and synthetic materials.

Toluene Market Outlook for 2026:

Cost Perspective: Crude oil prices are expected to fluctuate at low levels in 2026, resulting in weak cost support.

The ongoing conflicts in Ukraine and the Middle East will continue to exert intermittent direct impacts on oil prices, causing periodic fluctuations, but are unlikely to alter the long-term trend. The supply surplus is expected to persist until the first half of 2026, with the IEA forecasting a global daily surplus of 4.09 million barrels. US shale oil production is projected to increase by 1.2 million barrels per day, driving this surplus. Although OPEC+ plans to suspend production increases in the first quarter of 2026, internal disagreements and insufficient spare capacity will limit the effectiveness of their adjustments, making a further decline in the price center highly probable. Influenced by the interplay of supply and demand, geopolitical conflicts, and OPEC+ policy adjustments, Business News Agency predicts that the crude oil market in 2026 will generally exhibit a "low-level volatile" trend.

Raw materials aspect: Naphtha production is growing steadily, and raw material supply is sufficient.

Naphtha is the main raw material for toluene production, and its production and market conditions directly affect the development of the toluene industry. With the continuous improvement of China's refining capacity and the sustained release of downstream market demand for naphtha, China's naphtha production has continued to grow steadily. Data shows that from January to November 2025, China's naphtha production was approximately 73.955 million tons. The main naphtha producing regions in China are Shandong, Guangdong, Liaoning, and Zhejiang provinces, with Shandong province having the most prominent production, accounting for approximately 35%. The steady growth in naphtha production provides important raw material support for the development of the toluene industry.

Domestic naphtha production is expected to increase slightly in 2026, with an estimated year-on-year increase of approximately 0.6% to 1%, which will provide a solid foundation for toluene supply. Abundant raw materials and the gradual commissioning of refining and chemical projects will lead to steady growth in basic toluene production. In terms of costs, the production cost of toluene follows the trends of the naphtha and crude oil markets. Additionally, the commissioning of new PX production capacity in 2026 will continue to drive demand for toluene disproportionation, partially offsetting fluctuations in blending demand and providing support for toluene prices.

Supply side: Toluene supply is expected to increase in 2026

Toluene, as a core raw material in basic organic chemical industry, is currently experiencing increasing market demand both domestically and internationally. In 2026, domestic supply is expected to continue its structural expansion. The growth in supply is mainly driven by the continuous implementation of large-scale integrated refining and chemical projects.  The estimated new capacity for the year is around 1.65 million tons, primarily from supporting aromatics units of leading companies such as Hengli Petrochemical, Shenghong Refining & Chemical, and Huajin Aramco.  The commissioning of these facilities is concentrated in the second half of the year, with the Bohai Rim and East China regions being the core areas for new capacity, contributing over 70% of the total increase. In the future, manufacturers will place greater emphasis on the toluene commodity market, increasing their export activities. Therefore, the domestic market supply of toluene is expected to continue to rise steadily in 2026.

Demand side: Stable with a slight upward trend.

Toluene has a wide range of applications, including blending gasoline and producing various toluene derivatives such as p-xylene, o-xylene, and benzyl alcohol. The domestic downstream consumption structure of toluene is stable, with gasoline blending accounting for approximately 52%, disproportionation accounting for approximately 26%, solvents accounting for approximately 12%, and TDI and other uses accounting for approximately 10%. Based on current market information, Business News Agency predicts that toluene demand in 2026 will continue the trend of "steady growth with structural differentiation," with an expected annual growth rate of approximately 3%-5%, indicating steady growth in industry demand.

Regarding fuel blending: Demand remains dominant but the growth rate is slowing, currently accounting for approximately 52%. The increase in vehicle ownership in 2026 will provide rigid support, but the proportion of toluene blended under the National VI emission standards is already low. Coupled with the penetration rate of new energy passenger vehicles rising to over 35%, which suppresses demand for fuel vehicles, the demand for toluene in the fuel blending sector is expected to increase by 1%-2% year-on-year, with its share slightly decreasing to around 50%.

Disproportionation: Currently accounting for approximately 26%, the commissioning of PX projects such as Huajin Aramco's 2 million tons and Jiujiang Petrochemical's 1.5 million tons in 2026, coupled with the expansion of downstream pure benzene capacity, will significantly boost toluene demand; the implementation of disproportionation units as part of integrated refining and petrochemical complexes will also increase companies' purchasing enthusiasm. Disproportionation demand is expected to increase by 8%-10% year-on-year, raising its share to 29%-30%.

In the solvents and other sectors: demand remains stable, with solvents currently accounting for approximately 12% of the market. Benefiting from the bottoming out and recovery of the real estate market and the increased demand for high-end solvents, a year-on-year increase of 2%-3% is expected; demand for TDI, pharmaceutical intermediates, etc. (accounting for 10%) is expected to see moderate growth of around 3% driven by the recovery of end-user markets.

Overall, the demand for toluene in 2026 is expected to show a pattern of "stable demand for fuel blending, strong demand for disproportionation, and stable demand in other areas," resulting in a steady increase in total toluene demand. In 2026, attention should be paid to the commissioning of PX plants and the impact of the growth of new energy vehicles on the fuel blending industry.

Export aspect: Toluene exports are growing steadily.

Toluene exports have become crucial for balancing domestic supply and demand, and the export landscape has undergone a fundamental transformation. In 2022, China shifted from a net importer to a net exporter, and the export momentum continued to strengthen. Customs data for January-November 2025 shows exports reaching 890,100 tons, a surge of over 89% year-on-year, setting a new historical high for the same period and significantly alleviating domestic supply pressure.

Toluene exports are expected to continue growing in 2026, but at a more stable pace, projected to exceed 1.1 million tons for the year, representing a 10%-15% year-on-year increase, supported by three main factors. Firstly, accelerated industrialization in emerging markets such as Southeast Asia is generating strong demand. Countries like India, Vietnam, and Indonesia are rapidly advancing their manufacturing sectors, leading to continuous capacity expansion in industries such as coatings, pesticides, and chemical intermediates, driving rapid growth in demand for toluene as a basic raw material. However, local toluene production capacity lags behind demand growth, resulting in high import dependence and providing ample room for increased Chinese toluene exports. Secondly, the continuous implementation of integrated refining and petrochemical projects in China, with integrated facilities of leading private refining and petrochemical companies such as Hengli and Rongsheng, as well as major state-owned enterprises like Zhenhai Refining & Chemical, coming online in recent years, has significantly increased the concentration of China's toluene production capacity. Finally, European toluene production capacity continues to decline due to high energy costs. From 2023 to 2024, Europe cumulatively shut down approximately 11 million tons of petrochemical capacity, including a large number of aromatics-related facilities. The market gap created by the contraction of European domestic toluene supply further created opportunities for Chinese toluene exports. The record-high export volume in 2025 provided some positive support for the domestic market.

Market Outlook:

In the short term: At the end of the fourth quarter, the toluene market saw a slight price recovery driven by the positive impact of traditional downstream stocking demand in December. Looking ahead to 2026, the cost and supply sides appear to offer little in the way of significant changes, remaining generally stable. However, the demand side still shows positive signs; the blending oil market in Shandong province is expected to have further upside potential around the Chinese New Year, and the disproportionation industry is also benefiting from high benzene prices. Exports have performed well in recent years, and supported by strong demand, the toluene market is expected to have some upward potential at the beginning of 2026.

In the long term, toluene prices will continue to be supported by cost factors, while supply is expected to increase, and downstream demand still has room for growth. Overall, future demand is the most important factor to watch. Demand from the blending industry will be slowed by the penetration of new energy sources, with growth slowing to 1%-2%. Demand from the disproportionation industry is expected to grow by 8%-10%, driven by high benzene prices. Exports will continue to show a net export pattern, with expected annual exports of 1.1 million tons, a year-on-year increase of 10%-15%. Given the mixed positive and negative factors in supply and demand, toluene prices are expected to remain volatile within a range, fluctuating around 5,800-7,000 RMB/ton throughout the year. Attention should be paid to the commissioning of PX plants and the increase in exports.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.