Europe January toluene confirmed, settles in a wide range

04 January 2013 10:06  [Source: ICIS news]

LONDON (ICIS)--The January toluene contract price range has been agreed at $1,290-1,325/tonne (€993-1,020/tonne), producers and consumers confirmed on Friday.

The settlement marks a decrease of $5/tonne on the low end and increase of $28/tonne on the high end compared to the December contract price, which was agreed at $1,295-1,297/tonne.

The January toluene contract was settled on a free on board (FOB) northwest Europe (NWE) basis.

One buyer said it settled in a $1,290-1,310/tonne price range, while another agreed its January contract at $1,325/tonne.

The first settler said: “On one hand I had a slight decrease of $7/tonne and a slight increase of $13/tonne.I thought it [the market] was a tightly balanced market but when I had stuff to sell nobody bought because they had full storage. I thought people would have some room to store but this is obviously not the case - there is enough material around.”

The buyer said it tried to sell 500-1,000 tonnes of toluene in December for early January delivery but “nobody wanted it”.

The second buyer who settled one of its contracts at $1,325/tonne said its price moved up because prices are strong in the US, Asia and India.

“My intention was not to let the arb open and the US will stay high,” the second buyer said.

Producers of toluene concurred that toluene prices across the rest of the world were high and looked set to remain this way particularly in the US.

A major producer said it settled its contract prices at the “top end” of the range.

“I got three contracts done [on Wednesday] at the top end $1310/tonne, $1,315 and $1,325. It was an unusual one because of the lack of transparency. The view to each company’s own perception of where the market is as opposed to clear publicly available information”.

The producer also spoke about high prices in the US and Asia, with particular focus on the US.

“It’s really interesting. Shale oil crude is having less BTX [benzene, toluene, xylene] coming out of the reformer. The crackers are running shale gas so less pygas is coming out. Instead of US refiners running reformers from hydrogen they now they have cheap natural gas - they are putting it in steam reformers - it seems to be a supply side story. Then of course the markets are short of benzene and paraxylene so then there is a pull on toluene.

“I knew about the impact on the crackers. I didn’t realise you got crude which is much lower in aromatics. Much of the crude is going to the Gulf coast. The local Europe situation almost irrelevant, it’s all very odd,” the producer concluded.

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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