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The European Toluene Market Projected to Drop to 2.4 Million Tons by 2023

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The European toluene market was equal to 2.537 million tons in 2013. The largest country market within the region was Germany, which in 2013 accounted for a share of 31% of the total in volume terms. Until 2023, the European market is forecast to drop to around 2.4 million tons, thus growing at a CAGR of about 0.9% per annum in the period 2018-2023. This is a slight increase, compared to the decline at a CAGR of around 2.5% per year, registered in 2013-2017.

The European production of toluene is likely to grow to around 2.5 million tons in the medium term. However, flat dynamics of the overall installed production capacities in the region and their annual average utilization rates are expected. In addition, the market is forecast to remain relatively balanced in terms of supply and demand, also showing moderately upwards dynamics in the medium term.

One of the leading trends on the global toluene market is linked with the fact that it is widely used as a raw material for the production of many intermediates among which benzene and xylene. The growing demand for aromatics in the petrochemical industry for the production of synthetic fibers, elastomers, agrochemicals, dyes, nail paints, and others has been a major driving factor for the global toluene market. What is more, toluene is also a major petrochemical used as a fuel additive. It can be used both as a blendstock for gasoline and as a feedstock for chemical production. As a blendstock, toluene demand is seasonal in nature and it is most attractive for blenders during the driving season. Outside of driving season, toluene is most appealing as a feedstock for chemical production. There has been a certain trend connected with the development of alternative solvents, which was prompted mainly by the increasing legislative pressure towards reducing toluene usage. In addition, the use of toluene poses a serious threat to the environment, which is why the regulatory boards, such as the US Environmental Protection Agency (EPA), have imposed strict regulations on the permissible level and content of VOCs in everyday products.

Regionally, one of the strong trends observed on the North American toluene market is linked with the discovery of shale gas. The shale revolution in North America has had a huge impact on petrochemical production on the continent. The North American aromatics market has been particularly impacted, with benzene, toluene, and xylenes (BTX) production taking a notable hit in recent years. What is more, in the end of 2017, there were storm damages caused by Hurricane Harvey and Hurricane Irma, both of which added pressure on supply. The impact of the hurricanes led to lower refining operating rates. As for Europe, an important aspect of the toluene market is the BASF’s 300,000 MT/year facility in Ludwigshafen, as it has supported a large part of the European demand for toluene. After the re-opening of the facility in Germany, it was expected the production levels of toluene and TDI to increase in 2017 and to fill the supply deficit that has been applying upwards pressure on the TDI market for most of 2016. However, the manufacture issues led to lower demand for toluene, used by the TDI market.

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