China’s Toluene Market Sees Further Imbalance in Supply-Demand in 2022
Click:0    DateTime:Sep.09,2022

By Mi Duo, Jilin Petrochemical Research Institute

Chen Guancheng, Jilin Chemical Group Information Network Technology Co., Ltd.

Production analysis and forecast

China’s toluene capacity increased by 3.36 million t/a to 20.407 million tons in 2021, with total output at 8.58 million tons. Around 1.35 million t/a of new capacity is available for sale. Table 1 shows the major petroleum toluene producers in China and their capacity in 2021. 



China’s toluene capacity is expected to increase by around 2.941 million t/a in 2022. Sinopec Hainan Refining & Chemical and PetroChina Guangdong Petrochemical keep the output for captive use and no volumes are available in the market from the two producers, while other producers are willing to sell. Increasing supply will alter the existing trade flows and further exacerbate the imbalance between supply and demand. Table 2 shows the new toluene capacity in China in 2022. 


Market analysis and forecast

China’s toluene output kept increasing in 2017-2021, as showed in Table 3. Demand remained curbed in 2021 by the negative influence from COVID-19, so the overall operating rate was low and imports shrank sharply year on year. The share of demand from the chemical sector continued to expand in 2021. The share of demand from the gasoline market decreased from 30% in 2020 to 28% in 2021. Outputs of benzoic acid, benzyl chloride, nitrotoluene and other products decreased in 2021 due to power rationing on producers, so their toluene consumption decreased year on year in varying degrees. No significant increase was seen in the share of demand from toluene disproportionation (TDP). Para-xylene (PX) producers bought significant volumes of toluene amid wider gap between benzene and toluene prices and the development of new TDP processes. However, this was offset by less self-consumption at some PX producers as they carried out maintenance or reduced run rates. Figure 1 shows the demand structure of toluene in China in 2021.




Figure 1 Demand structure of toluene in China, 2021

Toluene demand from the coating solvent sector may shrink further in 2022, as producers gradually replace highly polluting oil-based products with environmental-friendly water-based products in response to strict environmental protection requirements. In terms of gasoline blending, travelling activities and usage requirements at home and abroad may show an uptrend in 2022 as the negative influence from COVID-19 on economy is expected to weaken further, which will stimulate gasoline demand. With the continuous development of China’s synthetic materials industry, especially the polyurethane (PU) sector, the rapid expansion of toluene di-isocyanate (TDI) capacity will also support the demand for toluene. 

Price analysis and forecast

Toluene prices in China were largely on an uptrend in 2021 and the average prices were higher year on year. Taking the east China market as an example (Figure 2), local prices peaked in late October and the lowest level was seen in January. The average price for the whole year was RMB5 608/ton, up by RMB1 803/ton or 47.39% from 2020. 


Figure 2 Toluene prices in east China, 2021

Demand is largely unchanged and the supply-demand fundamentals are largely stable in 2022. Toluene prices are expected to go up, fluctuating in the range of RMB4 500-8 000/ton.

Import and export analysis and forecast

China’s toluene imports decreased while exports rose sharply in 2021, leading to lower import dependency ratio. The liquidity of trades within the country increased significantly. China imported 206 000 tons of toluene in 2021, down by 17.15% year on year. The total export volume was 97 000 tons, up by 29.3% year on year. China’s toluene imports in 2022 are expected to fall further. 

The major origins of China’s toluene imports in 2021 were all in Asia. Table 4 shows its major import origins in 2021. 


China mainly imported toluene through general trade in 2021 and share of this trade mode in total imports remained above 70% in the past five years. Imports through supplied materials processing trade were mainly seen in coastal regions in east China. The import and export businesses at bonded areas mainly concentrated at ports in east China. Table 5 shows the trade modes of China’s toluene imports in 2021.