01 March 2010 07:49 [Source: ICIS news]
By Mahua Chakravarty
SINGAPORE (ICIS news)--Asia’s toluene market is expected to remain stable-to-weak in the coming week or two amid sluggish demand for imports from China due to very high inventory levels there, regional traders and producers said on Monday.
Inventory levels as high as 140,000-150,000 tonnes in eastern China suppressed demand for imports, resulting in few trades and negotiations between Chinese buyers and regional sellers. Tanks in southern China also had high stocks, estimated to be about 50,000 tonnes, local traders said.
Stocks had mounted due to strong demand for imports in the past two months, market participants added.
Furthermore, about 40,000 tonnes of imports were expected to reach Chinese shores in March, adding to the existing glut, regional and local traders said.
China is the largest market for toluene in Asia, with monthly imports in 2009 averaging at 65,000 tonnes, according to China Customs.
Demand from downstream buyers within China was also very thin these days, slowing down the consumption of the existing stocks, local traders and distributors said.
Some of the key downstream applications for toluene within China are toluene di-isocyanate (TDI); solvents like paints, thinners and coatings and as a blending agent for gasoline.
Holidays for Lunar New Year celebrations in mid-February had brought trading to almost a halt in the past few weeks, with a number of downstream factories shutting down in China as workers headed to their hometowns.
"Demand has not picked up yet as most factories will start operating from this week. We will have to see how demand is in [the next] two weeks," an east China-based trader and distributor said.
Supply from local producers was also ample as they probably had high stocks as well, some traders said.
Some Chinese traders, last week, were reportedly trying to resell some earlier purchased cargoes due to the existing glut and some difficulties in getting tank space, some traders said.
On Monday, trading was very thin on FOB (free on board) Korea basis as sentiment remained weak due to the poor market conditions within China, market participants said.
Prices fell $5.00-10.00/tonne (€3.67-7.34/tonne) from last Friday to $840-855/tonne FOB Korea, according to global chemical market intelligence service ICIS pricing.
In eastern China, offers were reported at yuan (CNY) 7,050-7,100/tonne ($1,032-1,039/tonne) ex-tank, CNY50/tonne higher than last Friday’s close.
($1 = €0.73; $1 = CNY6.83)
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