– Market continues to watch impact of VAT on trade
– East China domestic prices higher on the day
Asian toluene was assessed up $1/mt day on day at $676/mt FOB Korea and $702/mt CFR China on Thursday on thin trading. Earlier during the day, an offer for a 2,000-mt second-half April was seen at $725/mt CFR China, while buying indications for 2,000-mt cargoes for any May were heard at $695-$700/mt CFR China. In the domestic East China market, prompt cargoes on an ex-tank basis were heard discussed at Yuan 5,400-5,420/mt early in the day and stayed around the same level throughout the day as Chinese market participants continued to watch the impact the new value-added tax rate — which came into effect April 1 — would have on imports. Under the new rate, petrochemical products like toluene, would have a VAT of 13% — down from 16% earlier. The domestic East China marker was assessed at Yuan 5,410/mt, which equates to an import parity value of around $685/mt, up Yuan 50/mt from the day before. In related market news, nitration grade toluene in the US continues to skyrocket, with front-month nitration grade toluene assessed at 267 cents/gallons. Many in Asia are keeping an eye on arbitrage opportunities. Some FOB Taiwan cargoes were heard bound for the US and more trades are expected to be concluded should prices continue to rise in the US, sources said.
The FOB Korea marker was assessed at $676/mt Thursday, up $1/mt from the previous assessment. The CFR China marker was assessed at $702/mt Thursday, also up $1/mt from Thursday, amid thin trades. 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 $702/mt CFR China and H2 May at $702/mt CFR China on Thursday, maintaining the market structure day on day, and tracking the domestic Chinese market.