September European toluene contract price expected to fall $105-185/mt: sources

London (Platts)–27 Aug 2015 636 am EDT/1036 GMT

The European toluene monthly contract price for September is expected to decline sharply, following significant falls in the toluene spot and gasoline markets in the past month, sources said Thursday.

Sources have quoted a wide range of $560-640/mt for their expectations for the September contract price, pointing to a monthly fall of $105-185/mt. There were three separate settlements for the August contract price at $745/mt.

"I expect a deep correction on the toluene monthly contract price," a source said Thursday.

Another source agreed, saying that the large decreases in the spot price will push down contract price.

The toluene spot price for both grades of toluene has tumbled in the past month.

The nitration grade spot price fell to an assessment of $583/mt FOB ARA Wednesday, down 21% since July 27.

The TDI spot price decreased to an assessment of $600.50/mt FOB ARA Wednesday, down 19% in one month.

A third source who expected the September settlement to be settled below $600/mt said, "with gasoline trading below $500/mt, no toluene contract price above $600/mt can be justified."

The gasoline price has indeed taken a toll in the past month, dragging down the toluene spot prices.

The Northwest Europe gasoline Eurobob barge price has plummeted 23% to an assessment of $483.75/mt FOB AR Wednesday, from $629/mt on July 27.

The third source added that the negative conversion margins and the "massive losses" to extract benzene from toluene is also pressuring toluene.

The benzene spot price was assessed at $560/mt CIF ARA Wednesday, plunging the toluene-benzene spread firmly into negative territory.

The benzene price was assessed $23/mt and $40.50/mt below the nitration and TDI grade toluene spot prices respectively on Wednesday.

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