Northwest European toluene spot demand from chemical end-users was expected to remain subdued this month, after consistently weak chemical demand for toluene has kept hydro-dealkylation margins in negative territory throughout the year, according to Platts data.
Hydrodealkylation, or HDA, is one of several processes that entail converting toluene to benzene and operators globally need a spread ranging anywhere from $150-$250/mt to make HDA economics work.
In Europe, HDA operators typically need around a $200/mt premium which has not been seen this year.
The NWE benzene premium over toluene has been improving during the fourth quarter but remains below the $200/mt premium needed to make HDA profitable.
Tuesday's premium of $76.50/mt compared with the 2015 average of $48/mt and the November average of $74/mt.
NWE benzene spot barges for delivery 5-30 days forward were assessed at $626.50/mt FOB ARA Monday, while toluene spot values were assessed at $550.50/mt FOB ARA.
The benzene market is largely balanced as the first signs of end-of-year destocking is being met with demand from smaller industry consumers and traders looking for spot benzene cargoes in anticipation of the demand uptick in January after the holiday season.
Meanwhile, toluene spot demand continued to be driven gasoline blending economics, despite BASF's new 300,000 mt/year toluene diisocyanate (TDI) plant in Ludwigshafen, Germany coming online in mid-November.
As a result, benzene is unlikely to need an additional supply route from HDA conversion in the coming weeks and HDA operators are eyeing chemical demand for toluene in the new year.
