Europe toluene HDA players watch rising benzene closely
Rhian O'connor
17-Apr-2015
LONDON (ICIS)–European producers of benzene via the toluene
hydrodealkylation (HDA) process are looking closely at the
relative price between the two, sources said on Friday.
The HDA process uses cheap toluene to make benzene at times
when there is a significant economic advantage of doing so.
The exact trigger pricing differential depends on a number of
factors, including the price of alternative uses of toluene
such as gasoline.
Benzene prices have spiked up this week, hitting the $900/tonne mark on Thursday evening. This led some to start looking at HDA.
“We are now starting to screen for HDA with the widening
spread. Margins are improving. Depending on the benzene price
development it could be optimal to buy toluene,” said one
toluene buyer.
However, volatility is not helping the calculation with
strong swings in benzene, toluene and gasoline.
“The HDA producers are handicapped, they are still afraid of oversupply. Once they trigger production they cannot stop immediately. [Prices] are moving up and down too fast. I wouldn’t be surprised if they fall back again next week,” said a distributor.
Toluene producers hope for another outlet for product, with many saying gasoline blend premiums are not attractive enough to produce.
“[HDA] could bring liquidity back to the market, and allow toluene producers to earn some margin above the blend premium of $60-70/tonne,” said the buyer.
Benzene spot prices are quoted on a cost, insurance and freight (CIF) Amsterdam-Rotterdam-Antwerp (ARA) basis. On Thursday evening toluene spot prices were $710-725/tonne FOB (free on board) Rotterdam.
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