Toluene Market Expected to Reach $33.23 Billion by 2030-Allied Market Research

According to a new report published by Allied Market Research, titled, "Toluene Market by Derivative Type, Application, and Production Process: Global Opportunity Analysis and Industry Forecast, 2021–2030,"the global toluene market was valued at $20.09 billion in 2020, and is projected to reach $33.23 billion by 2030, growing at a CAGR of 5.2% from 2021 to 2030.

Toluene is a clear water insoluble aromatic hydrocarbon solvent that possesses aromatic, benzene-like smell, and is a highly volatile flammable liquid. It becomes vapor when exposed to open atmosphere at room temperatures. It is produced from petroleum and coal tar, and is used as a solvent in the manufacturing of other organic chemicals, such as benzene, xylene, and toluene diisocyanate. In addition, it is used as a prime solvent in manufacturing gasoline, inks, paints, lacquers, thinners, adhesives, rubber, cleaning agents, and other products.

Growing population has surged the demand for various consumer goods, which in turn has led the chemical manufacturing sector to witness a significant growth where toluene is widely used as an intermediate in manufacturing a wide range of chemical-based products. Moreover, increase in investments in automotive, electrical & electronics, paints & coatings, adhesive manufacturing, and other sectors in both developed and developing economies have  surged the demand for high quality commercial grade toluene used as an intermediate in producing paints, thinners, adhesives, and other products. These factors are predicted to contribute toward the global market growth.

However, production of toluene releases various toxic chemicals that if exposed beyond the concentration limit may cause several health-related issues such as irritation in eye, vision failure, respiratory problems, dizziness, genotoxic, cardiovascular, and gastrointestinal problems. Furthermore, it is considered as a hazardous air pollutant (HAP) and toxic substance by the U.S. Environmental Protection Agency (U.S. EPA). These factors are anticipated to hamper the market growth.

Technological advancements and increasing R&D activities have surged the production of toluene from shale gas at very low costs. This has led the both manufacturers and consumers become more linear towards using shale gas-based toluene for various end use applications. This factor is anticipated to offer new opportunity in the global toluene market. In addition, factors such as growing concentration of manufacturers, availability of raw materials at reduced prices, and arrival of local players has led the manufacturers to offer toluene at low prices. This factor is predicted to create remunerative opportunities for expansion of the toluene market in the future.

The toluene market is segmented on the basis of derivative type, application, production process, and region.

By derivative type, the market is segregated into benzene & xylene, toluene diisocynates, gasoline additives, and others. The benzene & xylene segment dominated the global market, in terms of revenue in 2020, with five-ninth of the total share. This is attributed to rapid development of building & construction activities in both developed and developing economies where benzene & xylene are primarily used for the production of polyurethane foams. Furthermore, benzene & xylene are among the most common industrial chemical that finds application in almost all chemical manufacturing units. This factor aids the development of benzene & xylene segment in the global market.

By application, the market is divided into drugs, blending, cosmetic nail products, and others. The drugs segment dominated the global market in terms of revenue in 2020, with four-ninth of the total share. This is attributed to the increasing severity of diseases, which in turn has led the pharmaceutical sector to witness significant growth where toluene-derived benzaldehyde and benzoic acid are extensively used in manufacturing a wide range of pharmaceutical ingredients. Moreover, the addition of toluene derivatives prevents the growth of bacteria in pharmaceutical ingredients. This has made consumers become more linear toward using toluene for various drug manufacturing purposes.

By production process, the market is fragmented into reformate processes, pygas processes, coke/coal processes, and styrene processes. The reformate processes segment dominated the global market, with four-ninth of the total share in 2020. This is attributed to the fact that reformate process is one of the major production process by which aromatic hydrocarbon such as benzene and toluene are produced. Furthermore, the increase in adoption of reformate process for producing toluene in several end-use sectors such as oil & gas, paints & coatings, cosmetics, pharmaceuticals, and others is augmenting the growth of the reformate processes segment in the global toluene market.

Region-wise, the toluene market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. The Asia-Pacific toluene market size is projected to grow at the highest CAGR during the forecast period, and accounted for a major toluene market share in 2020, owing to increasing applications of toluene is sectors such as paint & coatings, electronic, healthcare, automotive, cleaning industry, cosmetics, textiles, and others in the Asia-Pacific region. Moreover, the strong demand for toluene in countries such as China, India, Japan, and Korea, due to different developing application segments has attracted the key players to expand or enter in the region.

Key players operating in the global toluene market include BASF SE, Chevron Phillips Chemical Company LLC, Dhanlaxami Organics & Chemicals, ExxonMobil Corporation, Kakdiya Chemicals, LyondellBasell Industries Holdings B.V., Mitsubishi Chemicals Corporation, Mitsui Chemicals, Pon Pure Chemicals and Valero Energy.

COVID-19 analysis

The novel coronavirus is an incomparable global pandemic that has spread to over 180 countries and caused huge losses of lives and the economy around the globe. The toluene market has been negatively impacted due to the wake of the COVID-19 pandemic owing to its dependence on chemical manufacturing, oil & gas, paints & coatings, building & construction, automotive, and other sectors. According to a report published by the National Bureau of Statistics of China, the chemical manufacturing industry witnessed a 20% decline in production in March 2020 as compared to March 2019, while profits declined by 66%. Also, several companies have either shut down or shrank their operations due to the risk of infections among the workforce where toluene is used as solvent for manufacturing various consumer goods. This has temporarily hampered the growth of toluene market amid the COVID-19 period. In addition, the falling income of customers and travel restrictions imposed by both local and government bodies have halted the growth of the transportation sector which in turn has negatively impacted the oil & gas sector where toluene is widely used as solvent in oil refining applications. For instance, according to a report published by Energy and Economic Growth Survey, the oil & gas sector is among the hardest hit sector with an average contraction of -2.8% in 2020. This has shrunk the demand for toluene in the oil and gas sector.

Key findings of the study

• By derivative type, the benzene & xylene segment is estimated to display the highest growth rate, in terms of revenue, registering a CAGR of 5.4% from 2021 to 2030.
• By application, the reformate process segment is estimated to display the highest growth rate, in terms of revenue, registering a CAGR of 5.5% from 2021 to 2030.
• By application, the drugs segment is estimated to display the highest growth rate, in terms of revenue, registering a CAGR of 5.2% from 2021 to 2030.
• By region, Asia-Pacific garnered the highest share of 46.2% in 2020, in terms of revenue, growing at a CAGR of 5.8%.