FocusAsia toluene prices hit six-week high

19 September 2007 11:32  [Source: ICIS news]

By Mahua Mitra

 

SINGAPORE (ICIS news)--Asia’s toluene values have hit a six-week high, up about $20/tonne since early August, driven by record-high crude prices and rising naphtha costs, said traders and producers on Wednesday.

 

Prices now stood at $795-810/tonne FOB (free on board) Korea, while the last time they were assessed above $800/tonne was in the week ended 3 August.  

 

Trading commenced with bids heard for October shipment at $785-790/tonne FOB Korea, $5/tonne higher from Tuesday but later a Korean producer confirmed purchasing a November parcel for $800/tonne, citing tightening supply and surging energy values.

 

Following this, prices remained on an uptrend with offers heard during open market trading at $820/tonne FOB Korea for the second half of October and November shipments, countered by bids at $805/tonne FOB Korea.

 

Meanwhile, crude values rose above $82/bbl to a new record high, while naphtha prices rose to a four-month high at $724.50-727.50/tonne CFR (cost and freight) Japan.

 

Wednesday’s sudden rise in toluene prices came as a surprise as they have remained largely unchanged in a range of $770-790/tonne FOB Korea level since early August, with few cargoes changing hands in recent weeks.

 

Some traders remained sceptical and felt current prices might not be reflective of the real market level.

 

“There is no change in the market fundamentals,” said a Korean trader.

 

High supply within Asia and slow demand for Chinese imports have been the key factors behind the slowdown.

 

Inventory levels in eastern and southern China continued to be high, added traders. A total of about 100,000 tonnes of toluene was estimated to be in storage tanks in the country.

 

Touluene demand from downstream factories was stable to weak, China-based traders said, therefore higher crude and FOB Korea prices had limited impact on the domestic market and prices remained stable to firm.

 

Deals in eastern China were heard at yuan (CNY) 7,200-7,250/tonne ($957-963/tonne) ex-tank, while those at southern ports were traded in a range of CNY7,500-7,550/tonne ex-tank.

 

Naphtha is the feedstock for toluene in crackers and reformers feed crude.

 

($1 = CNY7.52)

 

By: Mahua Chakravarty
+65 6780 4359

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