NWE Toluene – Chemical premium values weak with no spot demand

Imported Data

– Premiums down $2/mt

– US gasoline demand could reduce market length

European toluene premiums twitched downwards on Thursday due to lackluster demand from the chemical sector and talk of lower premiums attracting business from gasoline blenders. The April and May premiums were down $2/mt on Thursday to $115/mt over Eurobob gasoline swaps. Sources pegged toluene petrochemical value in a wide range of $100-$130/mt, compared to blend value in the gasoline market at $50-$80/mt. “There’s no real chemical number for toluene in the spot market right now as everyone is covered by contract,” a trader said. Sellers were however very resistant to drop premiums to the chemical market based on blend value, he said. Arbitrage to the US remained closed, keeping levels of availability high in Europe. The gasoline market could lead some reduction in stocks however, as a strong gasoline market has been led by demand from the US this week. With MTBE banned as a blendstock in the US, demand for gasoline for that market would require alternative high-octane components such as toluene.

RATIONALE:

S&P Global  assessed the CIF ARA toluene premium over Eurobob gasoline at $115/mt for April on Thursday, down $2/mt from Tuesday amid weak chemical demand. The chemical value for toluene was heard in a range of $100-$130/mt, but demand was said to be driven by blend value. This was heard in a range of $50-$80/mt. The May premium was assessed at $115/mt, flat to April.

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