FocusAsia toluene demand to be weak due to holidays, volatility

08 February 2010 09:29  [Source: ICIS news]

By Mahua Chakravarty

SINGAPORE (ICIS news)--Asia’s toluene demand will remain weak for the next two weeks due to the Lunar New Year holidays and volatility in crude futures, traders and producers said on Monday.

Trading of toluene would be limited as February is a shorter month and countries like China, Taiwan, Singapore and Malaysia would be closed for Lunar New Year celebrations, they added.

Local and regional traders said toluene demand from China, the largest market in Asia, would remain moderate due to the upcoming holidays, starting mid-February.

Toulene, one of the key aromatics with a wide range of applications, is used for making solvents, meant for paints, coatings and thinners. It is also used as an octane booster for gasoline blending, especially in the US and some countries of Asia. It is also a feedstock for benzene, mixed xylenes and paraxylenes.

“There will be hardly any deals this week, as it is very hard to open LCs [letter of credit] before the holidays next week,” a Chinese trader said.

Traders said high inventories in eastern China, an estimated 120,000 tonnes, would limit imports.

Domestic market prices on Monday were at yuan (CNY) 7,100/tonne ($1040/tonne) ex-tank, CNY100/tonne lower than last Friday.

Local traders said a key domestic producer on Monday cut its offers for the south China market to attract buyers.

Local traders and distributors in southeast Asia said trading in countries like Malaysia and Singapore would remain dull due to upcoming Lunar New Year holidays.

“I think the next round of buying [in southeast Asia] would be in March, as a lot of people have stocks until end February,” a regional trader said.

Regional traders and distributors said buyers in the overall region lost confidence and turned inactive as crude futures dropped to $71/bbl from $78/bbl in the past week.

No negotiations for imports into India were reported last week. Local traders said buyers were cautious and delayed purchases.

A trader based in Mumbai said: “There is fear in the market. People are confused and not able to make any decision.”

Toluene prices in Asia were at $850-865/tonne FOB (free on board) Korea level on Monday, largely stable from Friday, according to global chemical market intelligence service ICIS pricing.

($1 = CNY6.83)

For more information on aromatics, visit ICIS chemical intelligence
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By: Mahua Chakravarty
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