GPCA ’10: Chinese importers to slash toluene term contracts in ‘11

08 December 2010 09:44  [Source: ICIS news]

DUBAI (ICIS)--Chinese toluene importers are planning to slash term contracts next year on the back of high availability of the aromatics product in the country, a Chinese trader and importer said on Wednesday.

“Term contract volumes will be reduced in 2011,” he said, speaking on the sidelines of the 5th Gulf Petrochemicals and Chemicals Association (GPCA) forum being held in Dubai, the United Arab Emirates.

Chinese importers lost money on toluene this year as local supply and imports had been higher than the domestic market demand, he said.

“All the importers have lost money due to the high stocks and price gap [between US dollar and Chinese yuan values],” he added.

He said the local traders can pay a maximum of $900/tonne CFR china this week considering the yuan values.

“We have gone for more than a 50% cut in 2011 contract volumes [compared with 2010],” the trader said,  referring to the ongoing discussions among importers and regional exporters for next year’s term commitments.

In 2010, Chinese importers had locked themselves into an estimated 40,000 tonnes of monthly term contract volumes, which resulted in a record stock build-up in eastern China’s shore tanks from March this year.

At present, toluene inventory in eastern China was estimated at about 120,000 tonnes, almost double the monthly demand for the region.

Toluene was assessed $10/tonne (€7.50/tonne) lower at $920-935/tonne FOB (free on board) Korea on Wednesday morning amid wavering sentiment due to a sharp dip in crude futures.

In eastern China, deals were mostly concluded on Tuesday at yuan (CNY) 7,100-7,150/tonne (1,068-1,075/tonne) ex-tank, with the low end falling by CNY50/tonne from Monday.

($1 = €0.75 / $1 = CNY6.65)

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By: Mahua Chakravarty
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