Spot US TDP margin enters positive territory for first time since February

Petrotahlil : Prompt US benzene continued to rise Tuesday and was seen bid as high as 290 cents/gal as participants sought to cover positions in a tight market.

Assuming a benzene price of 291 cents/gal, a toluene price of 244 cents/gal and mixed xylene at 246 cents/gal, the TDP margin comes in around $32/mt. Such a margin is the first time TDP economics have turned positive since late February, S&P Global Platts data show.

Looking forward, the profitability of TDP units remained questionable as the US benzene market is sharply backwardated, with July values last seen at 260-270 cents/gal on a DDP basis.

Taking the high end of that range and assuming stable pricing for toluene and mixed xylenes, TDP margins would fall back to minus $27/mt, according to Platts calculations.

When it comes to selective toluene disproportionation (STDP) margins, benzene had a positive impact, but continued weakness in paraxylene is keeping the margin in negative territory.

Participants say that going forward, toluene conversion margins would rely heavily on feedstock toluene pricing to remain profitable.

US toluene prices have largely traced gasoline blend values amid the onset of the summer driving season. Toluene's blend value was last estimated at around 244 cents/gal, a rise of nearly 22 cents compared with the beginning of the month on the back of a wider spread between regular and premium gasolines, also known as the regrade.

While toluene's blend value could theoretically move lower, any declines were expected to be mitigated amid poor extraction economics. Toluene's premium to reformate has loitered at unprofitable levels since late May and was last estimated at about 16.25 cents/gal. Poor economics could restrict production and ultimately push pricing higher, a process some sources say has already begun.

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