– Domestic Chinese prices heard higher on the day
– Market expects bullish toluene
Asian toluene rose $3-$6.50/mt Tuesday to be assessed at $701/mt CFR China and $675/mt FOB Korea, respectively, on the back of a best bid heard at $674/mt FOB Korea during the Market on Close assessment process Tuesday. During the MOC process, a 2,000-mt any May bid was heard at $660/mt FOB Korea, which was subsequently raised to $674/mt FOB Korea but no interest was heard generated. “So today is the 13% VAT [kicking in] for all manufacturing industry, but not many people are indicating their buying interest yet as this is just the first day of the week and the month as well. So most participants are still observing for now,” a Chinese trader said Tuesday. In China, East China domestic prompt ex-tank cargoes was heard discussed at Yuan 5,300-5,320/mt on Tuesday with prices hovering around the same level towards the end of the day. The domestic East China marker was assessed at Yuan 5,310/mt, converting to an import parity of about $671/mt and was up some Yuan 90/mt from Tuesday. Meanwhile, inventory levels in Jiangsu, East China was heard at 71,200 mt on Tuesday as the week saw inventory growth of about 12,800 mt compared with an outflow of 13,500 mt, sources said, causing an overall inventory drawdown. “The market will be bullish due to crude. Chinese inventory down and demand will be in the market as of this week. Furthermore, the purchasing manger’s index in China seems to be good,” a South Korean source said Tuesday. On that note, the Caixin China Manufacturing PMI rose to 50.8 in March from 49.9 in February, rebounding from the three-year low observed in January at 48.3, according to a report by S&P Global Market Intelligence. A reading below 50 indicates contraction. Despite this, some in the market are still maintaining cautiousness. “[Spot] market is very quiet today morning, but lower tax rates in China could spur demand further,” a South Korean market source said Tuesday. In other markets, an H1 May 3,000 mt cargo was heard traded at $725/mt CFR Vietnam on Tuesday.
The FOB Korea marker was assessed at $675/mt FOB Korea Tuesday, up $6.50/mt from the previous assessment day, and was assessed above a best bid heard at $674/mt FOB Korea during the MOC assessment process Tuesday. The CFR China marker was assessed at $701/mt Tuesday, up $3/mt from Tuesday, tracking the FOB Korea up. The FOB Korea and CFR China markers take the average of the third and fourth half-month laycans, currently H1 and H2 May. H1 May was assessed at $701/mt and H2 May at $701/mt CFR China on Tuesday, changing the market to a flat structure from the backwardation on Tuesday, to track the domestic East China market structure.