Aromatics prices dwindle in Indian market amid major slump in crude oil – 2 Dec 2014

A glut in supply has led to a sharp fall in crude oil prices. The prices have declined for fifth straight month. Crude oil prices have dropped over 30 per cent in just six months. As a result, prices of aromatics fell sharply in October and November. Aromatics prices in India plummeted on Monday on bearish market sentiment, weaker upstream oil and energy fundamentals– with US crude slumping below $65/bbl after OPEC decided to leave output unchanged late last week and limited demand from derivative markets due to year-end inventory destocking.

Yesterday, Indian producers RIL and BPCL revised their prices for Aromatics. They have reduced the price (benzene, toluene etc) by about Rs.10 per kg, as compared to their prices on 1st Nov, 2014.

Currently, toluene prices are being traded at Indian rupee Rs.57/kg ex-tank in Kandla and Mumbai, about Rs.6-8 per kg less than last week. The current prices are almost 18-20% less than the prices in the month of August, when a production superfluity had started.

Isomer-grade xylene also continued their downtrend in the current because of abundant supply, weak off-taking activity from the downstream PX buyers and volatility in the upstream crude futures. Most traders are expecting isomer-grade xylene to continue trending down.

Meanwhile, styrene (SM) prices crashed some 10% to $1,040/tonne CFR (cost and freight) China, down from $1,157.50/tonne CFR China on 28 November.

Buyers in the Indian market are hesitant as they anticipate further price slippages in the near future.

Prices of aromatics can't be supported in the Indian as well as global market unless the inventories are low or OPEC agreed to lessened the production and lift up oil prices. Currently, the OPEC is pumping around 30 million bpd.