Weak oil futures weigh down on Europe toluene pricing

18 April 2013 10:28  [Source: ICIS news]

LONDON (ICIS)--The ongoing slump in oil and energy futures has pulled European toluene prices down, sources said on Thursday, although spot activity remains quiet amid slow demand and limited export potential.

There has been very little activity in the domestic spot market in April, with some offers earlier in the month around $1,150/tonne (€886/tonne) on a CIF (cost, insurance, freight) basis, but these were not met with any corresponding interest from buyers.

One consumer said that it had heard of CIF deals done earlier this week at $1,100/tonne and $1,125/tonne, but these were so far unconfirmed.

While one seller felt that $1,100/tonne was too low, even on a CIF basis, it nonetheless conceded that the sharp drop in Brent futures seen this week must be weighing down on toluene price ideas.

“Interestingly, benzene has stayed firm though,” the seller added.

Suppliers largely agree that there was no real incentive for them to bring down offers, as there is no real demand outside of contract. With the US Gulf market still trading below $4.00/gal, there is no workable arbitrage from Europe into the region.

“Spot numbers would have to be well below $1,100/tonne for that to work,” said one source. “The netback is not a good indication of where the European market is right now.”

Limited availability outside of contractual volumes kept European toluene numbers from dropping sharply in the face of the heavy Asian losses towards the end of March. There was also talk of up to 6,000 tonnes leaving Europe this month, helping to keep the market balanced.

With spot toluene still around $200/tonne above current gasoline levels, there is no likely impact on demand from the blending sector on the horizon, and players do not expect any uptick in activity in the coming weeks.

($1 = €0.77)

By: Truong Mellor
+44 208 652 3214

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