FocusSE Asia toluene slumps to 7-month low

12 September 2008 10:54  [Source: ICIS news]

SINGAPORE (ICIS news)--Poor demand from the downstream segments along with ample supply and a plunge in benchmark free on board (FOB) Korea values have seen toluene prices in southeast Asia fall $50/tonne from last week to a seven-month low, said traders and producers on Friday.

 

Prices were notionally assessed at $950-980/tonne CFR (cost and freight) SE Asia (southeast Asia), their lowest since 22 February, according to global chemical intelligence service ICIS pricing.  

 

“Prices are coming down like a tonne of bricks,” said a Singapore-based trader, referring to the $330/tonne drop in toluene prices in southeast Asia since 11 July.

Trading had been slow in the past few weeks in the region due to poor downstream demand and weak buying sentiment, said traders.

 

Buyers were cautious of purchasing given the steep fall in crude and toluene prices in the past two months, they added.

In addition, some factories in countries like Malaysia have lowered production rates as raw material costs surged.

“Local consumption is low these days and supply is quite high,” said a second Singapore-based trader.

“[A] Lot of people have high-priced cargoes [and] their tanks are full,” the first trader said.

 

Buying ideas were heard at $920-960/tonne CFR SE Asia for end September or October shipments.

 

In the Philippines, a cargo purchased at $1,085/tonne CFR SE Asia in August was due to arrive in the first half of October.

 

Due to such earlier purchases made at higher levels, Philippines-based buyers had reduced their requirements to only 500 tonnes for each purchase, said a local trader.

 

“We are in a wait-and-see position at present and in the local downstream markets, nobody’s buying,” added another Philippines-based buyer.

 

Echoing this sentiment, other regional traders said they had no intention to buy at present.

 

A slowdown in the US and regional economies had also percolated to the downstream markets and affected demand, said traders.

 

“We have not seen something like this in a long time,” said the first Singapore-based trader.

 

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By: Mahua Chakravarty
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