The November/December time spread in Asia's toluene market has flipped into a contango structure after cargo loadings were postponed from October to November, boosting next month's supply.
The November/December spread in the physical market reversed to a contango of minus $6/mt on Thursday, from a backwardation of plus $5/mt on Wednesday, clearly reflecting prompt weakness in the market, Platts data showed.
The FOB Korea marker was assessed at $942/mt Thursday, down $6.50 from Wednesday.
Sellers in the Asian toluene market said some buyers were unable to take delivery in October as they could not obtain letters of credit and nominate vessels, leaving the sellers overwhelmed with higher stocks for November.
A Chinese trading company had bought 20,000 mt of toluene for October loading from various sellers, but was having difficulty taking delivery of all the cargoes within the stipulated time period, market sources said. A trader in the company said they were in the process of finding a solution for the problem.
The trader said even though the company had already opened LCs for several cargoes and nominated vessels, it is still not able to load some cargoes yet due to undisclosed complications.
A major South Korean producer said two cargoes of 2,000 mt each that he had sold for October loading to a Singapore-based trader were still stranded in the company's storage tanks, as the buyer was not able to take delivery. He said both cargoes have now been postponed for November loading.
The producer said the company had requested the buyer to move the cargoes to a different storage facility as they were under pressure to maintain their inventory.
"We can hold the cargoes for another five days," the producer said, noting that the buyer was willing to move the cargoes within that time frame.
A Singapore-based trader said two 2,000 mt cargoes of toluene he had sold to a trader for October loading was now in limbo as the buyer had not yet taken delivery of the cargoes. He said one cargo was stranded in Daesan port, while the other was at Yeosu.
"I have not had any communication from the buyer as yet regarding the cargoes. I am still waiting for them to open an LC and nominate a vessel," he said.
