European toluene spot price slides on crude slump, weak demand

LONDON (ICIS)–Daily toluene spot prices in Europe fell this week, in response to lower oil prices and decreasing premiums.

The range dropped by $40/tonne on Thursday at $755-765/tonne FOB (free on board) Rotterdam, with Eurobob trading at $691-692/tonne. Premiums for toluene over the Eurobob gasoline number were seen around $65-75/tonne.

Brent crude oil, which Eurobob is priced against, crashed on Wednesday amid the US-China trade battle and lifting of a force majeure for several key Libya crude export facilities. Global oil supplies have surged on the back of higher output, as per the latest IEA (International Energy Agency) data for June.

Europe spot toluene daily, $/tonne

Toluene faces competition from other products, which is another factor in lower demand, said a trading source early in July: “Blenders are okay… they have MTBE (methyl tertiary butyl ether), other octane boosters [as alternatives to toluene].”

Meanwhile supply is available: “Now there [are] no shutdowns, everybody is producing,” added the source.

“It is true that there is plenty around,” agreed a second trading source at the start of the week. The ongoing outage at BASF’s toluene di-isocyanate (TDI) plant out this adds to market length, he added.

Once the Ludwigshafen, Germany, plant restarts and resumes toluene consumption, this could bring the market to balance, but it is not clear when this will take place.

Overall, TDI demand is seasonally softer.

A third trading source said this week that besides a major bidding for spot, they did not see “that much interest” from other players.

Toluene’s monthly contract price for July settled down $30/tonne on the back of weakened demand.

High US gasoline stocks add to a weakened picture for consumption, reducing the pull on European toluene for exports.

Additional reporting: Helena Strathearn
Picture source:  Helmut Meyer zur Capellen/imageBROKER/REX/Shutterstock