FocusAsia toluene hits 5-month low; may fall further on poor demand

18 May 2012 08:30  [Source: ICIS news]

SINGAPORE (ICIS)--Spot toluene prices in Asia may continue to fall in the near term after hitting a five-month low on Friday, on weak demand, market sources said.

At midday, toluene spot prices were assessed at $1,065-1,080/tonne (€841-853/tonne) FOB (free on board) Korea – levels last seen in December 2011 and down by $90-95/tonne from the closing prices on 11 May, according to ICIS.

Plunging crude futures prices are exerting strong pressure on the Asian toluene market.

At 07:54 GMT, Brent crude futures were down 52 cents at $106.97/bbl. Naphtha prices in Asia were at $888.50-891.50/tonne CFR Japan at midday.

“[I believe] costing is an important factor,” said a key regional producer, referring to the influence of crude and naphtha prices on aromatics.

Currently, the spread of benzene and toluene prices over naphtha is still higher than the breakeven point $140-150/tonne, market sources said.

This suggests that toluene prices still have more room to fall, they said.

Market sources pointed to a sense of panic in the price direction of crude futures amid the gloomy macroeconomic picture as dampening buying sentiment.

Buyers in China, southeast Asia and India have all retreated to the sidelines this week as regional toluene prices went on a sharp downtrend.

“Anyone who buys now is someone who has no choice,” an aromatics producer said.

“Everybody is losing [in this market], as no one expected crude to drop,” said a southeast Asia-based trader and distributor.

Toluene supply in northeast and southeast Asia is currently balanced-to-high, traders said.

($1 = €0.79)

By: Mahua Chakravarty
+65 6780 4359

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