Europe toluene market still quiet ahead of March negotiations
Truong Mellor
25-Feb-2013
LONDON (ICIS)–The
European toluene market remains quiet ahead of March contract
negotiations, sources said on Monday, with ongoing
illiquidity and a widening range making it difficult to assess where prices
should be.
“We are seeing offers that are steady to firm,” said one
buyer. “But lower Asian numbers and the drop in Brent last
week pulled bids down to around $1,230/tonne.
(€935/tonne).”
Consumers stress that European prices have to move with
other regions in order to spur any additional purchasing
outside of contracted volumes.
Several sources also noted that traders
are looking for arbitrage opportunities to the US, with
prices in the region approaching the $4.50/gal level.
Toluene numbers in the US have gradually moved up alongside
higher gasoline prices.
Recent production outages in the Midwest and the US Gulf
Coast and an erratic benzene market are also likely to keep
the market volatile in the coming
months.
With current freight costs from the
Amsterdam-Rotterdam-Antwerp (ARA) region to the US around
$60-70/tonne, however, players are likely to break even
as opposed to taking any significant profit.
One trader said that there is currently a
lack of interest among shipping players to move vessels from
Europe to the US Gulf region, as there is no appetite there
to ship any material back on the return leg.
One major European consumer said that it expects all of this to play a role in March contract talks, which are due to get underway later this week.
“It will come down to prices in other regions,” the
consumer said. “Spot activity is dead. Liquidity in Europe is
worse than it was in 2012.”
One trader highlighted the upcoming
turnaround season in Europe over April and May as a potential
source of market activity.
“In such a finely balanced market, this
could lead to some price volatility,” the trader said.
($1 = €0.76)
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