25 January 2013 10:49 [Source: ICB]
The European toluene market remains illiquid in January, sources said on 14 January, with values tough to gauge amid volatile oil price movements and a bearish outlook on demand for the first quarter of 2013 among end users.
Bullish crude futures and a balanced-to-tight supply dynamic saw sellers maintain offers around the $1,350/tonne (€1,013/tonne) level earlier this month, despite no real upturn in purchasing activity following the December slowdown.
Consumers, however, kept bids around $1,300/tonne until several deals were done the week ended 11 January at $1,320/tonne FOB (free on board) Rotterdam.
One major consumer said it had seen 2,000 tonnes trade at that level, with the parcels fixed for export to India and the Middle East.
India is a net importer of toluene of nearly 200,000 tonnes in 2011 from several other Asian markets as well as from Europe, in a market that continues to grow at an annual rate of approximately 6%.
Following these deals, however, prices in both Asia and the US have softened amid bearishness in the wider aromatics complex, effectively closing the arbitrage window out of Europe.
There was also some speculation that FOB barge material was being sold into the European distribution sector, although one trader doubted this.
"Demand is not great so far," the trader said. "We cannot pay $1,320/tonne. Distribution numbers are still at the €1,020/tonne level and they need to be around €40-50/tonne higher for [such sales] to be workable."
Oil prices saw great volatility the week ended 11 January, with prices initially boosted by Saudi Arabian production news and strong economic data from China. However, prices began to slide later in the week before recovering.
All of which meant that players in the toluene market struggled to determine a direction for the market from oil and energy numbers, which is always a challenge in an illiquid market.
"Crude is really wild at the moment," said one producer. "There's nothing to hang your hat on there."
January toluene contract prices were agreed at $1,290-1,325/tonne FOB NWE (Northwest Europe), earlier in the month, the range widening from December amid unclear market direction following the seasonal lull.
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