aromatics producers eye toluene spot market to fill contract obligations
The cost of extracting toluene from reformate streams has prompted some
Northwest European aromatics producers to reduce their toluene extraction and
instead buy molecules from the spot markets, market sources said Wednesday.
The European spot price of TDI grade toluene was assessed at $754.50/mt
FOB ARA on Tuesday, while nitration grade was assessed at $748.50/mt FOB ARA.
The monthly contract price for toluene settled at a range of $780-785/mt,
putting the TDI grade spot price at a 4% discount to this month's contract
price.
"It has mainly been the blenders buying [from the spot market], but now
there's also a little bit of chemical demand," a chemicals trader source said:
"Maybe it's not economic to produce at current levels so they may want to buy
some tons from the spot market [to fill] contractual obligations," the trader
added.
A producer source said that reducing production and filling contractual
obligations partly from the spot market may make economic sense.
A third trader pointed out that the monthly contract price was currently
well above the gasoline blend value, so producers should be happy to fill
their contractual obligations via their own production.
The gasoline pool has been the main consumer for toluene output in recent
days, as benzene conversion margins have remained in negative territory since
last year. "To me the big question is why the big [toluene to benzene]
conversion units [in Europe] are still running. They must be losing money
constantly," the third source said.
aromatics producers eye toluene spot market to fill contract obligations The cost of extracting toluene from reformate streams has prompted someNorthwest European aromatics producers to reduce their toluene extraction andinstead buy molecules from the spot markets, market sources said Wednesday. The European spot price of TDI grade toluene was assessed at $754.50/mtFOB ARA on Tuesday, while nitration grade was assessed at $748.50/mt FOB ARA.The monthly contract price for toluene settled at a range of $780-785/mt,putting the TDI grade spot price at a 4% discount to this month's contractprice. "It has mainly been the blenders buying [from the spot market], but nowthere's also a little bit of chemical demand," a chemicals trader source said:"Maybe it's not economic to produce at current levels so they may want to buysome tons from the spot market [to fill] contractual obligations," the traderadded. A producer source said that reducing production and filling contractualobligations partly from the spot market may make economic sense. A third trader pointed out that the monthly contract price was currentlywell above the gasoline blend value, so producers should be happy to filltheir contractual obligations via their own production. The gasoline pool has been the main consumer for toluene output in recentdays, as benzene conversion margins have remained in negative territory sincelast year. "To me the big question is why the big [toluene to benzene]conversion units [in Europe] are still running. They must be losing moneyconstantly," the third source said.
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