Despite a wide-open toluene arbitrage from Europe to the US, opinions among traders differed Thursday on the feasibility of cargoes moving.
Transit time, vessel space and a dire outlook for downstream benzene has left some traders hesitant to commit toluene cargoes for delivery across the water, they said.
The European spot price of toluene was assessed Thursday at $710/mt CIF ARA, down $9/mt on the day and $20/mt below the February contract price of $730/mt. European toluene has trended downwards in line with an overall decline in energy prices and low demand from benzene converters.
The US spot price was last assessed at 263 cents/gal, or $799.52/mt, leaving a $89.52/mt spread between Europe and the US. Freight costs for a 3,000 mt parcels from Northwest Europe to the US was last heard pegged at $40-$50/mt.
"People are trying but everyone face the same issue, that for CIF USG cargoes into the USA they are not getting the same prices [as for FOB]," said a trader. FOB prices are usually at a premium to CIF, as storage costs are inclusive in them.
A second trader noted that despite toluene prices in the US being at parity between February and March, current demand was mostly for February molecules.
"It's FOB, it's for February and there is not[prompt] vessel space for transAtlantic routes, so its hard to make it work," he said.
A third market source, however, said that at least two cargoes had left Europe for the US in recent days, with a third one of the cards. The same source estimated that up to 10,000 mt of toluene could leave Europe for the US in February.
As in Europe, one of the main downstream applications of toluene in the US is conversion to benzene, normally a more valuable commodity.
"With concerns on length in benzene and energy coming off, I can't see anyone making it work at the moment," said the second source.
Activity in the European benzene market was muted on Thursday, as the European spot price slid down a further $6/mt and was assessed at $875/mt CIF ARA, hitting its lowest level since early November last year. In the US, February and March benzene moved down 2 cents/gal to be assessed at 304 cents/gal ($908.96/mt).
A plethora of styrene monomer turnarounds in Europe and the US in February and March are likely to put further pressure on benzene globally.
