Northwest European toluene prices pushed higher Thursday on the back of stronger US Gulf Coast prices, which has opened an arbitrage between the regions, sources said, although a lack of available spot product makes westbound exports unlikely.
The FOB US Gulf Coast market has spiked to 398 cents/gallon ($1,210/mt) on higher demand from chemicals producers in the region. This pulled levels higher in Rotterdam Thursday, with bids seen as high as $1,125/mt.
According to sources, the strong USGC market provides room for a rise in Rotterdam prices on a net back basis.
One source said a price around $1,210/mt in the US equated to a FOB Rotterdam level of $1,160/mt -- taking into account freight of around $60/mt between the regions.
A second source was less bullish, but still saw room for further price increases in NWE.
"Toluene numbers are really moving up. With the value in the US at 398 cents/gal, the net back value to Europe could be $1,140/mt, so there is further room for the price to move up," the source said.
While the open arbitrage brought prices theoretically higher, other sources said a lack of spot product in Europe would restrict any shipments. There have been no offers seen during the current week, with the last spot business done towards the end of December 2011 at $1,085/mt.
One trader said the market was "notionally much higher now," but there was "simply nothing around" in the Rotterdam market.
A second source said any potential seller would use the US situation to maximize the price they got.
"There a lot of talk going on. Anyone who can offer product is now holding back ... It's a game," the source said.
