Europe toluene's 46-month low sparks contract fear

31 October 2008 12:06  [Source: ICIS news]

By Peter Salisbury

LONDON (ICIS news)--A European spot toluene trade was reported at a near-four-year low of $520/tonne (€400/tonne) on Friday, laying the groundwork for an unprecedented drop in contract values, according to market participants.

“It’s all totally off the map,” said a source at one major producer. “We are in uncharted territory here.”

A trader reported selling the 1,000 tonnes, second-half November loading parcel to a blender, with a broker corroborating the number, set on a free on board (FOB) Rotterdam, basis, and the buyer declining to comment.

Market participants also taked of a second deal at $518/tonne FOB Rotterdam, also between a trader and a blender.

These were the lowest trades recorded by global chemical market intelligence service ICIS pricing since the week ending 24 December 2004.

“We are seeing a slowdown in demand from the petrochemical sector, and looking at gasoline, the number makes sense,” said the same source.

Gasoline trades were at $479-483/tonne FOB ARA (Amsterdam, Rotterdam) on Friday.

In a thin market with little noticeable demand, market participants had seen spot toluene moving in line with energy complex trends.

Bids had been seen at a $20-30/tonne premium to gasoline with offers at a $40/tonne plus premium for much of the week.

Spot toluene numbers on the last day of the month have traditionally led monthly contracting, according to market participants.

October contracts were settled at $870-935/tonne FOB NWE (northwest Europe), according to ICIS pricing. The latest trade could mean decreases of $350-415/tonne, or 40-44%, an unprecedented drop.

“It makes sense,” said a source at a major consumer. “October was settled way too high; we need to see some value come back into production.”

Both consumers and producers said that inventories had been at such low levels that stock depletion was unlikely to become an issue as in other parts of the aromatics chain such as benzene.

($1 = €0.77)

For more on toluene visit ICIS chemical intelligence
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By: Peter Salisbury
+44 20 8652 3214

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