FocusAsia toluene to remain stable-to-firm despite weak demand

18 February 2011 10:15  [Source: ICIS news]

By Mahua Chakravarty

SINGAPORE (ICIS)--Asia’s toluene prices were expected to be stable-to-firm in the near term backed by the current firm trend in crude, naphtha and benzene values, although the market was fundamentally weak, regional traders and distributors said on Friday.

Toluene prices in Asia firmed to a 30-month high this week and were at $990-1,005/tonne (€733-744/tonne) FOB (free on board) Korea on Friday, largely stable from Thursday and up $10-15/tonne from last week’s close, according to ICIS.

A deal for April loading was heard at $1,005/tonne FOB Korea late Friday afternoon.

Traders said that the gains in toluene were moderate compared with the $20/tonne price jump in benzene seen this week, due to poor demand from the key Chinese market.

Inventory levels in eastern China were estimated to be about 130,000-150,000 tonnes and could even go up to 170,000 tonnes by end of February due to the arrival of imports, said Chinese and regional traders.

“It needs several months for this amount of inventory to be digested,” said an east China-based trader.

“A lot depends on the gasoline price in China. If the government hikes domestic gasoline prices, then toluene can also go up,” the trader added.

Toluene is used widely as an octane booster for gasoline blending.

Import demand from China was further capped by poor consumption by downstream end-users, as factories were gradually resuming operations after the long break for Lunar New Year holidays earlier this month.

Lastly, prices in the Chinese domestic market on yuan basis were still hovering below the US dollar prices, said traders.

Hence, toluene availability in northeast and southeast Asia was estimated to be balanced-to-high. Supply from regional crackers and reformers was also high as they were running at near full capacity, they added.

($1 = €0.74)

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By: Mahua Chakravarty
+65 6780 4359



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