Europe toluene March negotiations at stalemate

Rhian O'connor

03-Mar-2015

LONDON (ICIS)–Negotiations for the European toluene March contract reached a standoff on Tuesday as buyers and sellers reported a considerable gap between buying and selling expectations.

There was an initial March toluene settlement late on Friday at $668/tonne after a difficult day of negotiations. This was followed by another buyer/seller pair confirming a second contract at the same level on Monday.

However, both buyers and sellers said that negotiations are still ongoing, with two producers viewing $668/tonne as too low.

“I also aim for a higher value. At this level the spread to gasoline is way too low to justify toluene production,” said a producer.

The second producer mentioned a higher deal done at $695/tonne.

“Toluene is very difficult this month. There was one deal done this morning at 695 [$/tonne]. We will need to find an agreement with the remaining customers. I hope to settle today. 668 is not the number we are happy with. 695 was still a compromise. 668 was such a surprise,” said the second producer.

However, others in the market disputed the validity of the $695/tonne deal, which is still unconfirmed on the buyers side.

“As long as a major confirms the price I don’t complain. But if all of a sudden, a buyer appears who never took part in the CP [contract price] negotiations, I’d have my doubts in accepting it as a ‘real’ contract price,” said a buyer.

The initial and second settlement at $668/tonne represents an increase of $133-138/tonne on February’s range.

The contract was agreed on a free on board (FOB) northwest Europe (NWE) basis with further confirmation from other players still pending.

European toluene, unlike other aromatics, does not usually see a single monthly settlement, but instead often sees a range of numbers.

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