US Aromatics Market: Volatility & Complex Dynamics

Seasonal factors are regularly instrumental in shaping much of the dynamics of the US market for octane-enhancing aromatics like benzene, toluene, and mixed xylenes. In accordance with this logic, summertime, when the automobility-enhanced demand for gasoline always increases, acts as a positive driver for the aromatics market. Warmer months require the use of gasoline with a lower Reid vapour pressure (RVP) to combat fuel volatility and evaporation, thus raising the demand for octane-boosting aromatics.

However, the rise in the demand for aromatics is usually paralleled by their increased production and the boost in their inventories, which can reduce aromatics prices and minimize margins. US refineries currently demonstrate a robust operating rate. This may be disrupted by Tropical Storm Barry, which may affect the operation of the multiple petrochemical hubs in the state of Louisiana. For instance, the storm might affect the work of ExxonMobil’s refinery in Baton Rouge, Louisiana, which has a 100,000 mty toluene-manufacturing capacity. Hurricanes and storms add up to the overall volatility of the US aromatics market. In 2018, hurricanes hit the U.S. Virgin Islands, disrupting the work of the St. Croix oil refinery (owned by Limetree Bay Terminals), which was idled afterwards (the refinery owner took a decision to restart its operation in 2019). Formerly, this refinery had a 458,000 mty toluene capacity.

In July 2019 the demand for benzene on the US market boosted the interest towards toluene, thus pushing toluene spot prices up (the USA is the world largest manufacturer of toluene).

Top five toluene-manufacturing countries

The present demand for mixed xylenes remains rather flat though this may soon change due to the rapid fluctuations of their market, which is also true for the whole aromatics market. The aromatics market is fully dependent on the demand for other chemical products. This demand also dictates the most commercially viable (at a specific moment) production route. These routes could be unconventional. For instance, US companies Vertimass, a manufacturer of sustainable transportation fuels, and Alliance BioEnergy Plus, which works with cellulosic ethanol, are currently cooperating to produce benzene, toluene, ethylbenzene, and xylenes from cellulosic ethanol from sugars. Such technologies may drastically reduce carbon footprint.

A detailed analysis of the global aromatics market is available in the insightful research report “Aromatics: 2019 Global Industry Overview and Forecast”.