01 October 2012 07:20 [Source: ICIS news]
By Jasmine Khoo
Toluene prices have started to weaken about two weeks ago, falling by an average of $35/tonne (€27/tonne) to $1,185-1,195/tonne FOB
Brent crude is currently trading at above $111/bbl, down from $116-117/bbl two weeks ago.
Throughout August up to the middle of September, toluene prices had steadily increased on expectations of tightening supply of prompt cargoes in
Toluene producers in southeast Asia have limited surplus cargoes to sell to the spot market as their output is mostly for captive use of their downstream plants.
“Demand is hardly changed from the previous weeks…there will always be demand, [the difference is] just whether [it is] good or bad. It is hard to see any improvement in the near future because of macroeconomics. The current price level is comfortable. Sellers are willing to let go at this price, and buyers can accept it,” said a major southeast Asian buyer.
In the Indian market, some 3,000-4,000 tonnes of toluene from
South Korea-based producers noticed an increase in enquiries for large volumes of toluene – around 10,000 tonnes – from Indian buyers last week. But actual deals were limited as most South Korean producers do not have enough cargoes in their inventory to make the sale.
Most market participants said that as demand is unlikely to change anytime soon given the gloomy macroeconomic situation, crude oil futures and supply would be the main driving forces of toluene prices in
Demand for toluene in
“Prices have just begun softening…it is only natural for end-users to anticipate further price declines because of lower crude prices. This is why they [end-users] are purchasing in small quantities now to keep inventories lean,” said a China-based trader.
The Chinese markets are closed for the whole of this week.
“No one wants to come back after the holidays to find that they have made losses because prices are even lower than the current levels,” the trader said.
South Korean producers, on the other hand, expect the resumption of buying activities next week should buoy up prices.
“[Chinese] inventory levels are very low now, and supply is tight. We expect Chinese import prices to go up because demand will become better after the holidays,” said a company source from a major South Korea-based producer.
Another South Korea-based manufacturer concurred, saying: “They [Chinese buyers] have to buy cargoes because of the limited supply. [South] Korean makers are also more willing to sell after the holidays because we expect prices to be higher.”
($1 = €0.78)
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