Europe to US toluene arb open, but narrow - traders

26 March 2008 14:27  [Source: ICIS news]

LONDON (ICIS news)--A narrow toluene arbitrage was open from Europe to the US on improving values, European traders said on Wednesday.

 

Toluene was valued at $3.26-3.28/gal (€2.09-2.10/gal) FOB (free on board) US Gulf on the previous close of business in the US, by global chemical market intelligence service ICIS pricing, up $0.10/gallon and equivalent to $991-997/tonne FOB USG.

 

Players pegged European volumes at $940-970/tonne FOB Rotterdam at the open of business on Wednesday, some $27-51/tonne lower, with many saying that there was an opportunity to move material west.

 

“If toluene trades at about US minus $40/tonne in Europe, which is the cost of freight, then it is workable,” said one trader.

 

“But any lower than that and it won’t be profitable. So buyers will be bidding at minus $50-60/tonne and sellers will obviously offer higher.”

 

If a deal was done at around the current bid, the trader went on, a firm $940/tonne, then the arbitrage window would return a profit.

 

“I don’t think anyone would try it at the moment,” said a broker, however.

 

“ We saw deals at around $900-910/tonne a few days ago, but at the moment ExxonMobil is not producing [at Botlek] so European supply will be tighter and prices should move up to reflect what we are seeing in the US.”

 

The last deals recorded had been on Thursday 20 March at $900/tonne FOB Rotterdam.

 

($1 = €0.64)

 

For more on toluene visit ICIS chemical intelligence

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Author: Peter Salisbury
+44 20 8652 3214

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