European premiums for toluene over Eurobob gasoline fell by $5/mt Friday.

Chemical Industry

– Premiums down $5/mt

– Arbitrage window wide open on paper

European premiums for toluene over Eurobob gasoline fell by $5/mt Friday. April was assessed at a premium of $119/mt, with May assessed at parity. A range of $100-$120/mt was heard from a trader in the market, and supported by a second. Premiums are falling in the toluene market due to decent levels of material availability and thin demand keeping outright pricing in the spot market mostly static, according to sources. This is while gasoline swaps remain in contango, due to the switch to summer grade specifications for blending. The European market will have to deal with higher levels of supply in the weeks to come, with two shipments heard due to arrive in the second half of April from the Mediterranean. Storage tanks are already stuffed, a trader said this week, meaning sellers are keenly looking for arbitrage opportunity. The window appeared wide open on paper Friday, after forward US prices jumped on Friday due to logistical difficulties in the Houston Ship Channel. Due to issues impacting shipping in the area however, it remained unclear on Friday if this could provide a workable export route.

RATIONALE:

S&P Global Friday assessed the CIF ARA toluene premium over Eurobob gasoline at $119/mt for April, down $5/mt from Friday, within a range heard from a trader of $100-$120/mt. The May premium was assessed at $119/mt, flat to April.

 

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