Toluene and xylene barge markets have taken an interesting path in March 2025. Market expectations were for a big uplift to both T&X prices in March with the industry seeing a $0.2200 per gallon contango market for gasoline. Gasoline prices moved up in March but not to the degree we expected. And to everyone’s surprise, toluene and xylene prices have moved lower over the course of March.
February RBOB gasoline closed the month at $1.9703 per gallon. Early March RBOB jumped up to $2.1900 per gallon, which was right on expectations. However, the gasoline market trended lower for about a week and bottomed out at 2.0925 per gallon on March 10, 2025. Since then, the market has been on a steady upward trend, so the market is stabilizing and moving into a more normal seasonal trading pattern for March. For the record, February RBOB averaged $2.0615 per gallon and the average price through March 19th is $2.1479 per gallon, an increase of $0.0864 per gallon. Gasoline has gained some momentum but will it last?
The toluene market had a strong start to 2025 with the January market moving up $0.3246 per gallon to a January average barge price of $3.0399 per gallon. RBOB averaged $2.0634 per gallon and crude oil was trading in the mid 70’s. February toluene prices dipped by almost $0.0700 per gallon and the market has moved even lower into March by $0.2200 per gallon. Toluene is now trading around $0.5600 per gallon over RBOB so the relative strength of toluene vs gasoline has narrowed in a period where one would expect that relationship to strengthen since the spring gasoline season is upon us.
Xylene’s story is like toluene. January xylene moved up $0.2034 per gallon to $2.8444 per gallon on an average price basis. February xylene was down $0.0693 per gallon and March is now trading down by $0.1545 per gallon through March 19th.
Toluene prices have fallen for 3 out of the past 4 weeks as demand from the gasoline pool continues to be weak. Gasoline stocks as reported by the EIA (Energy Information Administration) were relatively unchanged with only a 500,000-barrel decline in the 3/14/25 report. However, refineries are operating at 86.5% of capacity implying that turnaround season is still in progress. When these refineries return to normal operations, we expect to see more gasoline in the market. This should create a better opportunity for more toluene blending into gasoline for the spring and summer season, assuming demand for gasoline is solid.
The xylene market has been choppier than toluene with the market moving in an up and down pattern for many weeks now. There is no doubt that xylene supplies are healthy with steady xylene imports arriving from South Korea despite the arbitrage window being closed on paper.
Toluene demand as feedstock for TDP and STDP operations continue to be challenged due to unfavorable economics for benzene and paraxylene.
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