The current downtrend in the toluene inventory level in East China could reverse in October or November, market sources said Thursday.
The inventory level in East China was heard to be 27,500 mt Thursday, down 8.33% from last Friday's level, which was a 10-month low.
The last time East China toluene stocks were lower was November 4, 2011, at 22,500 mt.
The fall, which began on August 24, came amid a reduction in cargo arrivals and tight domestic supply. Prior to the drop, the inventory level was steady at 80,000 mt over August 3-August 24.
Traders in China expected levels to start firming up in October after the country's Golden Week holidays as import cargoes arrive.
"After October 10, cargoes should arrive," a domestic trader said, adding that around 10,000-20,000 mt of toluene could reach East China ports by the end of October taking the inventory level to 35,000-40,000 mt.
Another trader said the recovery could be slow but levels should return to "normal" in November.
Domestic prices in China have been falling ever since they peaked at Yuan 9,890/mt, or around $1,296.07/mt on an import parity basis, on September 18. They were heard at Yuan 9,500-9,550/mt Thursday.
The domestic East China price of toluene surged 20.3% in less than two months -- from August 1 to September 18 -- to a four-year high due to tight supply.
The lower domestic price despite increasingly tight inventory levels indicates market expectations that the supply tightness could ease soon, a trader said.
