08 November 2013 10:00 [Source: ICB]
November contracts fall up to $95/tonne from October as spot prices have been weak
European toluene contracts for November have been confirmed at $1,020-1,025/tonne (€755-759/tonne), down $92.50-95.00/tonne from the previous month’s range.
One major consumer initially reported late on Thursday 31 October it had agreed November volumes at $1,020/tonne. This was followed by news of a settlement at $1,025/tonne between one supplier and several of its customers.
Other buyers and sellers later confirmed that they had agreed November volumes within the above range. The contracts were settled on a free on board (FOB) northwest Europe (NWE) basis.
European spot values saw a sharp drop over the course of October in line with global aromatics losses and weakening oil and energy costs. 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 in mid-October on an FCA (free carrier) basis, while global pricing would put buyers at or below this mark to make any export business viable.
Spot offers have held around $1,050/tonne, so the November contracts were settled around the midpoint of the buy/sell range. However, one trader felt this was 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 remains lacklustre despite the traditional seasonal upturn in September and October, although opinions differ on availability in the fourth quarter amid production problems. Despite the recent bearishness, one supplier said that global markets were starting to reverse the downtrend seen so far in the fourth quarter. Offers for spot material in the US dipped below $3.50/gal and hit a 22-month low in October amid bearish sentiment across the aromatics complex despite the turnaround season. However, there was a sharp upturn towards the end of the month alongside renewed buying interest.
Similarly, the Asian toluene market saw some upward movement towards the end of the month, as Chinese import demand improved, but overall sentiment remains bearish. Some restocking among traders was seen, with many sensing that the market had reached the bottom in terms of pricing. However, demand for the rest of the year is likely to stay subdued. There has been talk of a European spot deal done at $1,040/tonne towards the end of October, although this remains unconfirmed. Another seller said that there was some emerging interest for European material from buyers in the Middle East this month.
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