India’s toluene import demand to stay lacklustre on high stocks

SINGAPORE (ICIS)–India’s toluene import demand will continue to remain lacklustre on the back of high shoretank inventories and limited offtaking activity in the domestic market, market participants said on Wednesday.

Buying enquiries on a CFR India basis have been consistently limited, with most distributors unwilling to procure more imported material because inventory levels at Kandla were still averaging at least 30,000 tonnes, according to several market players.

“There’s at least one-and-a half months’ worth of inventories at Kandla alone and some distributors still have high stocks, which will take a while to digest,” a west coast India-based distributor said.

More arrival cargoes  of southeast Asia- and Europe-origin are expected in the first half of July, which means that inventories are unlikely to record large drawdowns.

This further supported buyers’ decisions to continue remain at the sidelines for a clearer demand direction to emerge, several India-based market participants said.

“We estimate at least 15,000 tonnes of material to be coming by first-half of July and as a result, nobody dares to book any import cargoes for July loading yet,” a second west coast India-based distributors said.

The lack of a workable gap between the import parity of domestic ex-tank prices and CFR India offers was another contributing to the weak import buying interest, market players said.

On an ex-tank basis, deals in Kandla and Mumbai were still at India rupee (Rs) 42.50-43.00/kg ex-tank at the close of business on 28 June, ICIS data showed. This was equivalent to an import parity of $598-605/tonne, on a non-dutiable basis, importer distributors said. 

CFR India offers for non-dutiable material, on the other hand, have been maintaining at above $650-660/tonne for the past two weeks because of the stagnant FOB (free on board) South Korea prices.

“The wide buy-sell gap has led to a stand-off in the market, no seller is giving a firm offer and no buyer is giving a firm bid yet,” one east coast India-based distributors said.

The depreciation of the rupee in the past two weeks was a key concern for most importers who said that their import costs have been consistently increasing.

While offtaking activities were still stable from end-users in the local ex-tank market amid the monsoon season, buyers were cautiously procuring material on a need-to basis, because of expectations that price falls could be extended with distributor selling pressure, market players said.

“Buyers are holding back from buying large quantities because they feel distributors can adjust prices further downwards if they have to get rid of the cargoes,” one east coast India-based distributor said.

Market players are only expecting the situation to turn for the better towards the first half of August, when inventory levels start showing significant drawdowns and an improvement in buying sentiment improves from domestic end-users.

“We will only procure cargoes for August loading, and leave the July window open for the time being to sell off our current inventory levels first,” a west coast India-based importer added.



Picture (top): Toluene is used in motor gasoline (imageBROKER/REX/Shutterstock)

Focus article by Trixie Yap