Toluene's premium to Eurobob gasoline swaps Wednesday hit its highest level since June 2, S&P Global Platts data shows, as exports from Europe to the US and Asia caused the premium to surge since mid-October.
The European spot price of toluene was assessed at $593/mt FOB ARA Wednesday, up $7.50/mt on the day and at a 6.65% premium to the October contract price of $556/mt.
Toluene's premium to the November Eurobob gasoline swap was assessed at $101/mt Wednesday, up $10/mt on the day and up $33/mt since October 14.
The toluene premium to Eurobob gasoline slumped in the first half of October, as German chemicals producer Covestro declared force majeure on toluene purchases for its 300,000 mt/year TDI plant in Dormagen, Germany.
The bearish outlook for toluene was further boosted when BASF declared force majeure last week on toluene purchases at its Ludwigshafen chemical park, following a pipeline explosion.
However, because of the sudden slump in toluene prices in Europe and strong demand in the US Gulf and Asia, traders were able to move considerable toluene volumes out of the region in a short space of time, resulting in a tight prompt market for toluene, sources said this week.
"Toluene is tight, everything has been exported from ARA at the moment," said one trader.
A second trader said all volumes that became available from the Covestro outage earlier in the month had already found a home outside of Europe.
At least two toluene cargoes are loading in the Antwerp-Rotterdam-Amsterdam area for discharge in India this week, a market source said last week.
Two parcels, one amounting to 5,000 mt and another one heard at 3,000-4,000 mt, will load in the ARA region next week for discharge in India, the source said.
Toluene prices in India were last heard at $670/mt CFR.
December toluene prices in the US Gulf were assessed at 196 cents/gal Wednesday, equivalent to $595.84/mt. Toluene prices in Europe, however, went as low as $568/mt FOB ARA in mid-October, while US prices hovered around current levels for most of the month. Another Europe-based market source said a toluene parcel had changed hands as high as 205 cents/gal earlier this week, equivalent to $623.20/mt.
"I would sell [toluene] in the US, better price, that's why its moving up [in Europe]," a Europe-based trader said this week.
