Asia toluene falls to eight-month low on energy losses

Trixie Yap

31-Aug-2015

SINGAPORE (ICIS)–Spot import prices of toluene within the Asia market fell to a new eight-month low on pressures from crude fluctuations last week, market players said.

Weekly prices – as of 28 August – for toluene were at $502-577/tonne FOB (free on board) Korea, down by around 7% from the previous week, ICIS data showed.

Despite the large drops in prices, buying sentiment improved because several end-users and traders were trying to either cover their short positions or looking to even out their higher costs from previous cargoes, market players said.

“There is more interest from Chinese buyers for end-September and early October cargoes because FOB Korea prices had dropped at a faster rate than domestic Chinese prices,” a key China-based trader said.

Moreover, with prices at lower levels, it also made more sense for toluene to go into the gasoline blending pool and as a feedstock for some solvent-related end uses, several northeast Asia-based end-users said.

End-users who were focusing on export sales, after it became more lucrative following the yuan devaluation, said they were also keen to take in spot cargoes for consumption.

“Export sales are more competitive and we can take in more imported toluene as a result, even though domestic sales are still slow,” a key maker of chlorobenzene in China said.

Trading momentum, however, slowed down nearing the end of the week as most market players started to display cautious buying behaviour after prices started to rebound. They were all hoping for a clearer price direction to emerge first.

“We are worried that if prices start to come back down, we would then be stuck with higher-priced cargoes again,” a Chinese-based trader said.

Amid all these mixed concerns, market conditions for September and October could start to look less harsh because of turnarounds at several facilities in the northeast Asia region.

This is expected to happen together with some restocking activities from Chinese buyers before the long holiday in early October, market players said.

“Prices could see a narrower fluctuation in the near-term, but it seems like demand-supply fundamentals are no longer in play and everyone is just looking at crude fluctuations,” a South Korea-based trader said.

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