The toluene arbitrage from Northwest Europe to India remains wide open, sources said. Firm bids were heard in the spot market this week from traders looking to move material East.
The European spot price of toluene was assessed at $560/mt FOB ARA on Wednesday, more or less in line with the November contract price of $565/mt and at a price equivalent to a $115/mt premium to Eurobob gasoline swaps.
The high premium toluene commands to Eurobob gasoline indicates that gasoline blending economics are not dictating European toluene spot prices at the moment, as was the case from late 2014 until the third quarter this year.
European gasoline blenders are heard bidding at a $60/mt premium to Eurobob gasoline, while traders looking to export have been heard willing to pay $85-$90/mt over Eurobob gasoline this week.
"I see some demand for...export to India...heard buying interest at $85/mt over gasoline for export," a trader said this week. A second trader source pegged the toluene premium at $90/mt.
A third trader source pegged the toluene spot price in India in a range of $640-$650/mt CFR India.
Against Wednesday's assessment of $560/mt, the spread to Asian prices was $80-$90/mt on Wednesday.
India's toluene shorts are traditionally filled by Korean material. On Thursday morning, the FOB Korea toluene marker was assessed at $611/mt, making the arbitrage to India challenging to execute.
