India toluene market slumps due to weak fundamentals, high stocks

28 May 2010 12:18  [Source: ICIS news]

SINGAPORE (ICIS news)--The Indian toluene market is on a downtrend for the second consecutive week as traders have been quickly liquidating cargoes due to a recent fall in regional prices, high stocks in Kandla and weak domestic demand, traders said on Friday.

Ex-tank values in the western Indian ports of Kandla and Mumbai were reported to be at Indian rupees (Rs) 39-40/kg ($0.84-0.86/kg), Rs1.5-2/kg lower than on 21 May, according to global chemical market intelligence service ICIS pricing.

“These prices are the result of panic, [as] two-tier traders are unable to hold the product,” said a key importer in India, adding that finance and storage costs were proving too much for these traders, who then started liquidating stocks.

Stock levels in Kandla had risen in the past few weeks due to high imports, with most traders’ estimates of stocks to be above 20,000 tonnes.

India is a net importer of toluene, with monthly purchases at 10,000-12,000 tonnes.

Due to the high stocks, demand in the domestic market was sluggish and buyers were also cautious following the volatility in energy and regional aromatics markets, according to traders.

Spot toluene prices in Asia rose on Friday and were hovering at $755-765/tonne FOB (free on board) Korea, after falling below $700/tonne FOB Korea on 25 May due to weak crude values, according to ICIS pricing.

($1 = Rs46.61)

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By: Mahua Chakravarty
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