Europe toluene players braced for November contract decrease
Truong Mellor
28-Oct-2013
LONDON (ICIS)–The
European toluene market is braced for a decrease on November
contracts, sources said on Monday, amid global bearishness
and weak pricing across the aromatics complex in
general.
With little appetite for material in
Europe outside of contractual business, spot numbers have
drifted downward this month. Offers were at $1,050/tonne
(€756/tonne) on a free on board (FOB) basis but there were no
firm corresponding bids.
Buying interest from the gasoline
blending sector was assessed around the $1,000/tonne level,
given recent FOB AR (Amsterdam-Rotterdam) gasoline prices in
the low $900s/tonne. One European
consumer said it had bought some low purity material around
the $1,000/tonne level on railcars last week, and
current global pricing would put buyers at or below this mark
to make any export business viable.
However, one trader
felt this was currently not an accurate gauge for the
European toluene market.
“There is no global support for
European numbers at the moment,” the trader said. “It is an
issue of domestic supply and demand for November.”
Demand in the European toluene
di-isocyanate (TDI) market is lacklustre despite the
traditional seasonal upturn in September and October,
although opinions differ on availability in the fourth
quarter following a force majeure last month.
Despite the current downward trend for European
toluene, several players feel that the bottom of the market
has been reached now, with prices in other regions starting
to recover from the losses seen earlier in
October.
Offers for spot material in the US
dipped below $3.50/gal last week and hit a 22-month low amid
bearish sentiment across the aromatics complex despite the
turnaround season. Prices appeared to have stabilised towards
the end of the week, however.
Similarly, the Asian toluene market saw
some upward movement towards the end of the week as Chinese
import demand improved, but overall sentiment remains
bearish.
“There was some restocking among traders
who felt that the market had reached the bottom in terms of
pricing,” one source explained. “But demand from now until
the end of the year will remain slow.”
European toluene contracts for October
were settled at $1,112.50/tonne and
$1,115/tonne, a decrease of $27.50-30.00/tonne from the
previous month in line with softer oil and energy numbers as
well as global pricing.
($1 = €0.72)
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