Europe toluene contracts face downward pressure for October
Truong Mellor
29-Sep-2014
LONDON (ICIS)–Players in the European toluene market
are braced for some downward movement on October contracts,
sources said on Monday, with weak derivative demand, healthy
regional availability and limited export opportunities all
weighing down on the market.
Spot activity has been limited in
recent weeks, with no clear buying
interest amid subdued demand and lower US pricing this month
restricting any export business.
Sources felt that supply in Europe was
ample, with sellers looking to place material but no real
impetus among buyers. With talks for October contracts
scheduled to begin this week, this is also keeping spot
liquidity to a minimum.
Spot levels were initially assessed at a wide range,
with gasoline prices around $900/tonne pushing buyers lower
amid limited interest for blending purposes, while the upward
movement on benzene helped support selling indications in a
thin market.
There were also offers heard as high as
$1,070/tonne last week, but many sources felt these were not
realistic given current global pricing. US toluene traded
last week at $3.55/gal FOB (free on board), which would
support arbitrage opportunities out of Europe across the
Atlantic at just above $1,000/tonne.
Asian toluene prices hit a 14-week low earlier in
September amid sluggish aromatics sentiment in the region,
and continue to languish below $1,100/tonne FOB Korea.
With European benzene spot levels edging up ahead of
the contract settlement expected this week, there was the
potential for some hydrodealkylation (HDA) demand in
October.
HDA production converts toluene to benzene, and
with benzene prices moving above $1,300/tonne, one toluene
consumer said that prices for European toluene around
$1,000/tonne could be workable.
However, there is still some
uncertainty about how sustainable European benzene prices
are. With the Amsterdam-Rotterdam-Antwerp (ARA) region now
leading the way globally, this is attracting imports from
both Asia and the US, which will weigh down on pricing next
month.
Additionally, benzene
fundamentals do not support a bullish position into the
fourth quarter, with downstream styrene looking specially
sluggish and some phenol shutdowns also likely to curb
demand.
European toluene contracts for September were agreed earlier this month within a range of $1,086-1,090/tonne FOB NWE.
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Contact us
Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.
Want to learn about how we can work together to bring you actionable insight and support your business decisions?
Need Help?