FocusAsia’s toluene nears record high

13 March 2008 09:17  [Source: ICIS news]

SINGAPORE (ICIS news)--Toluene prices in Asia were nearing an all-time high during Wednesday’s trading session on surging crude and feedstock naphtha values and were expected to break a new record, traders and producers said.

Prices moved higher on Wednesday to $1,000-1,010/tonne FOB (free on board) Korea, almost on par with the all time high seen during the week ended 11 August 2006.

Bids for cargoes loading in the second half of April were heard at $1,000/tonne FOB Korea and while no offers were heard initially, subsequent selling indications emerged at $1,030/tonne FOB Korea.

"Prices will break another record as supply is tightening and demand is expected to pick up," a Singapore-based trader said.

Supply in northeast and southeast Asia could tighten as naphtha crackers had reduced or were considering cuts in operating rates, a producer said.

Margins of BTX producers have been under pressure since the rally in crude and naphtha prices commenced in the fourth quarter of 2007.

On Wednesday, naphtha prices for the second half of April were pegged at $918.75-921.75/tonne CFR (cost and freight) Japan.

No deep-sea cargoes were expected to reach Asia in the coming days to alleviate the supply tightness, a trader said. Asia is a net importer of toluene from the US.

Demand from China, the largest importing market in Asia, had been lacklustre following the Chinese New Year holidays, which has resulted in low end-user inventories.

"The buyers will have no choice but to buy," a trader said.

The US summer driving season, which starts from May is expected to boost demand for gasoline and toluene globally, resulting in a firm trend in Asia, traders said.

Toluene is used as an octane booster for gasoline blending in the US.

By: Mahua Chakravarty
+65 6780 4359

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