Toluene – Procurement Best Practices & Sourcing Strategies

DESCRIPTION

Toluene Market Global Size:

The petrochemical and chemical sectors’ persistent need is anticipated to fuel the toluene product market’s ongoing expansion. Also, toluene’s importance as a gasoline additive may change because the car industry pursues its shift toward environmentally friendly transportation to adhere to new environmental safety standards. Hence, a procurement intelligence report from ELINT Market Research forecasted a capacity of 32.82 MMT and a demand of 26.05 MMT in 2023 for the global toluene market. Further, the demand metrics are expected to expand at 3.0 percent CAGR by 2026.

Further, the report states that the consumption of toluene has progressively increased across several significant end-use industries, including fertilizers & pesticides, beauty items, pharmaceuticals, and more. Collectively, these sectors are expected to become the main factors propelling the toluene market’s growth over the projected period. Additionally, the growing requirements for toluene from the automobiles household goods, and construction sectors are causing the paint and decorating business to increase at a modest speed. Since toluene is a common chemical that is used to dilute paints, finishes, resins, and alkyl polymers.

Moreover, different technology developments and a rise in research and development have made it possible for manufacturing firms to assemble toluene from shale gas at extremely affordable prices. Due to this factor, shale gas-dependent toluene is currently more widely used by producers and consumers for a variety of end uses. It is expected that this aspect will create new opportunities in the global toluene industry.

Market Definition:

Toluene incorporates an insoluble hydrocarbon chemical property and its aroma is similar to benzene. Also, toluene is an extremely flammable and explosive solution that is made from coal and petroleum and used as a lubricant in the production of other organic compounds, such as diisocyanate and benzene. It is also utilized in pigments, coagulants, glues, and inks as a solvent. Moreover, the three standardized categories of toluene that are employed commercially to buy toluene products include TDI score, nitration level, and commercial quality.

Toluene Market Drivers:

1. Demands from Automobile and Construction Industries –

Two key derivatives of toluene are phenol and styrene which are widely used in automobile and construction industries. Phenol helps in the manufacturing of polycarbonate resins which assist in diverse automotive parts. On the other hand, styrene helps to produce polystyrene and ABS plastics which mainly assist in insulation materials and various construction applications. Hence, rising vehicle manufacturing, technological refinements, and construction operations fueled the growth in the global toluene derivatives market.

2. Increasing Toluenec Uasge as Solvents –

Another major growth driving factor for the global toluene procurement market is its increasing usage in the form of solvent in paints, finishes, sealants, and inks. Toluene’s solvency qualities make it an essential component of the chemical and paint industry

Toluene Market Challenges:

1. Emergence of Eco-Friendly Solvents –

As worldwide companies adopt renewable and eco-friendly solvents the toluene market faces challenges. These sustainable alternatives of toluene help protect the environment and even adhere to stringent regulatory regulations. Thus, manufacturers are encouraged to innovate their toluene products and adapt to the changing market dynamics.

2. Lighter Cracking Processes in the US and the EU –

A transition toward lighter cracking operations in the US and the EU that help lower the crops of aromatic compounds, including toluene poses significant challenges in the market. Lighter cracking is a process that comprises the use of ethane and propane as feedstocks in steam crackers. The regions mainly employ this method due to the cost-effectiveness of shale gas.

Toluene Market Opportunities:

1. Expanding Export Activities in Asia –

APAC regions making progress in the international market by expanding export activities of toluene. Key factors like economic growth and industrialization drive this country as a major manufacturer and exporter of toluene products. Hence, other regions are importing toluene and its derivatives like benzene, xylene, and solvents from APAC. Moreover, Asian domains like China, India, and South Korea evolved their production capacities to fulfill local and international demands for toluene.

2. Needs for TDI (Toluene Di-isocyanate) –

Toluene Di-isocyanate (TDI) is a versatile derivative of toluene that mainly assists in furniture, bed, couch, and mattress fields. TDI operates as a key raw material in the manufacturing of flexible polyurethane foam that helps in beds, sofas, and other cushioning applications.

Toluene Market Segmentation:

1. Various Applications –

This global toluene procurement market research report reveals major applications of toluene including paints, adhesives, coatings, explosives, inks, the chemical sector, medicines, solvents, dyes, and more.

2. Primary Derivatives –

Primary derivatives of toluene include Benzene, gasoline, Xylene, and diisocyanates, which are widely employed derivatives in the international market.

Regional Analysis of the Toluene Market:

Fundamental countries that emerged as key suppliers of toluene goods and hold substantial percent shares in the worldwide market include North America at 17 percent, the EU at 15, Asia at 47 percent, and other regions at 21 percent. Hence, North America and the EU evaluated owning a higher level of supplier power and Asia holds medium supplier authority. On the other hand, these countries showcase low to medium degree buyer powers which makes suppliers dominant in the toluene market.

Moreover, this procurement intelligence report calculated the price outlook of the toluene market for the first quarter of 2023 with a comparison to the fourth quarter of 2022. Thus, in Q1 2023, key countries experienced a certain percent decrease in prices. For instance, NA at 15–20% decrease, EU at 10–15% decrease, and Asia at 0-2% decrease.

Additionally, these provinces execute their trade and price activities using particular engagement models between suppliers and buyers at a certain percentage of stakes. Hence, the US and EU collectively hold 70 percent stakes in contract transactions in the market. On the flip side, Asia possesses 50 percent stakes for spot buying contracts.

Impactful Cost Component and Contract Period in the Toluene Market:

Raw material prices emerged as the major and impactful cost component in the global toluene industry. Also, primary regions like North America, the EU, and APAC appeared to hold substantial 57%, 48%, and 50% stakes respectively for raw material costs. Moreover, the prominent contact model of the toluene market can stay for two years along with quarterly price revisions.

Key Suppliers in the Toluene Market:

Prominent suppliers of the toluene market include ExxonMobil​, Shell​, Flint Hills​, Dow​, Marathon Petroleum​, Sabic​, Braskem​, Pemex​, Petrobras​, GS-Caltex Oil Corp​, Sinopec​, CNPC​, Formosa Chemicals and Fibre​, Shanghai Petrochemical​.