22 June 2012 09:31 [Source: ICIS news]
By Mahua Chakravarty
SINGAPORE (ICIS)--Asia’s toluene prices may decline further in the near term because of a decline in Brent crude futures and the persistently weak demand from China, southeast Asia and India, traders and distributors said on Friday.
Toluene prices in Asia were at $970-980/tonne (€776-784/tonne) FOB (free on board) Korea on Friday, down by $20/tonne from the previous day, according to ICIS data.
Demand from China, Asia’s largest toluene importer, has largely been weak this year as the downstream solvent and gasoline blending sectors are struggling from the impact of a slower global economy, said Chinese and regional traders.
Demand from the paint, thinner and coating segments in China as well as across the region has slowed down considerably because of the country’s slower construction industry and weak demand for exports from the US and Europe, they added.
Toluene inventory levels in east China’s shore tanks have risen in recent weeks to 95,000-100,000 tonnes. This is largely because of the slow consumption rate of downstream buyers in China, despite the lower-than-usual import volumes in recent months, said Chinese traders and distributors.
However, the demand from China may rebound in the near term as the impact of the recent credit-loosening measures are beginning to be felt in the petrochemical sectors and this may support toluene prices in Asia, said a southeast Asia-based trader.
Trading activity in southeast Asia has been subdued in the past several weeks as distributors in Singapore, Malaysia and Vietnam have ample stocks as a result of the weak demand from the downstream solvent sector, said southeast Asia-based players.
“Our stocks in Vietnam are okay, but we have to buy to average down the costs,” said a distributor.
Stock levels are high at present and there are no plans to purchase any more cargoes at present, added a distributor in Singapore.
In addition, the demand for imports from India has slowed down considerably, said local and regional traders.
“India is in deep trouble. Traders and distributors are hit by the price crash and rupee devaluation, so everyone is [making] losses,” said an Indian trader.
Inventory levels in Kandla and Mumbai are balanced-to-high because domestic demand has been weak as a result of a slower Indian economy, said Indian traders.
“End users are buying on a need-to basis and the speculators are out of the market,” added a second Indian trader.
($1 = €0.80)
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