Europe toluene market subdued ahead of June contract talks

28 May 2013 11:26  [Source: ICIS news]

LONDON (ICIS)--The European toluene market is subdued ahead of June contract negotiations which are expected to get underway later this week, sources said on Tuesday.

One trader described the European market as “very quiet … we haven’t seen any spot transactions recently.”

While European toluene spot offers did see some upward movement earlier in the month, with offers moving as high as $1,185/tonne (€912/tonne) FOB (free on board) Rotterdam as sentiment was buoyed by higher US pricing, this was short-lived as lower values across the US aromatics complex brought toluene prices in the region back below $4.00/gal towards the end of May.

Looking at the US market, one trader said bids in Europe would be steered by a possible arbitrage from the ARA (Amsterdam-Rotterdam-Antwerp) region across the Atlantic, meaning that they would not be any higher than $1,140/tonne if the cargo was to ship to the US and land somewhere above a $1,200/tonne equivalent.

European spot values are currently assessed at $1,140-1,170/tonne FOB NWE (northwest Europe).

European toluene contracts for May were confirmed at $1,155-1,160/tonne FOB NWE, down $15/tonne from the previous month.

“The US market slipped a bit this month in line with aromatics in general,” said one major European consumer. “There was an expectation of better demand in Europe but May has been very quiet with the various holidays.”

The consumer added that even in previous years there has usually been a seasonal bounce for the driving season - albeit one that is likely supported by sentiment, as opposed to actual demand - but 2013 has been notably quiet.

With gasoline prices still comfortably below $1,000/tonne FOB AR (Amsterdam, Rotterdam) in Europe, the differential for blenders is unworkable in any event.

Meanwhile, the Asian market has recently suffered from weak demand and oversupply, which has seen a downtrend in the market since February 2013.

“There seems to be some nervousness there still,” one European buyer said. “The Nikkei index saw a drop last week.”

Domestic toluene di-isocyanate (TDI) activity in Europe was described as healthy by one producer, although others maintain a bearish outlook because of reduced consumer spending and confidence, which has affected downstream TDI outlets such as the bedding and furniture sectors.

($1 = €0.77)

By: Truong Mellor
+44 208 652 3214

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