Europe toluene players braced for November contract decrease

28 October 2013 10:05  [Source: ICIS news]

Europe toluene players brace for Nov contract fallLONDON (ICIS)--The European toluene market is braced for a decrease on November contracts, sources said on Monday, amid global bearishness and weak pricing across the aromatics complex in general.

With little appetite for material in Europe outside of contractual business, spot numbers have drifted downward this month. Offers were at $1,050/tonne (€756/tonne) on a free on board (FOB) basis but there were no firm corresponding bids.

Buying interest from the gasoline blending sector was assessed around the $1,000/tonne level, given recent FOB AR (Amsterdam-Rotterdam) gasoline prices in the low $900s/tonne. One European consumer said it had bought some low purity material around the $1,000/tonne level on railcars last week, and current global pricing would put buyers at or below this mark to make any export business viable.

However, one trader felt this was currently not an accurate gauge for the European toluene market.

“There is no global support for European numbers at the moment,” the trader said. “It is an issue of domestic supply and demand for November.”

Demand in the European toluene di-isocyanate (TDI) market is lacklustre despite the traditional seasonal upturn in September and October, although opinions differ on availability in the fourth quarter following a force majeure last month.

Despite the current downward trend for European toluene, several players feel that the bottom of the market has been reached now, with prices in other regions starting to recover from the losses seen earlier in October.

Offers for spot material in the US dipped below $3.50/gal last week and hit a 22-month low amid bearish sentiment across the aromatics complex despite the turnaround season. Prices appeared to have stabilised towards the end of the week, however.

Similarly, the Asian toluene market saw some upward movement towards the end of the week as Chinese import demand improved, but overall sentiment remains bearish.

“There was some restocking among traders who felt that the market had reached the bottom in terms of pricing,” one source explained. “But demand from now until the end of the year will remain slow.”

European toluene contracts for October were settled at $1,112.50/tonne and $1,115/tonne, a decrease of $27.50-30.00/tonne from the previous month in line with softer oil and energy numbers as well as global pricing.

($1 = €0.72)


By: Truong Mellor
+44 208 652 3214



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