08 March 2013 09:27 [Source: ICB]
Outlook unclear in quiet Europe toluene market
The European toluene market remains quiet ahead of March contract negotiations, sources said, with ongoing illiquidity and a widening range making it difficult to assess where prices should be.
A quiet market means nobody can say where prices should be
Copyright: Rex Features
Consumers stress that European prices have to move with other regions in order to spur any additional purchasing outside of contracted volumes.
Several sources also noted that traders are looking for arbitrage opportunities to the US, with prices in the region approaching the $4.50/gal level. Toluene numbers in the US have gradually moved up alongside higher gasoline prices.
Recent production outages in the Midwest and the US Gulf Coast and an erratic benzene market are also likely to keep the market volatile in the coming months.
With current freight costs from the Amsterdam-Rotterdam-Antwerp (ARA) region to the US around $60-70/tonne, however, players are likely to break even as opposed to taking any significant profit.
One trader said that there is currently a lack of interest among shipping players to move vessels from Europe to the US Gulf region, as there is no appetite there to ship any material back on the return leg.
One major European consumer said that it expects all of this to play a role in March contract talks, which were due to get underway the week ended 1 March.
"It will come down to prices in other regions," the consumer said. "Spot activity is dead. Liquidity in Europe is worse than it was in 2012."
One trader highlighted the upcoming turnaround season in Europe over April and May as a potential source of market activity.
"In such a finely balanced market, this could lead to some price volatility," the trader said.
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