A lower toluene spot price in South Korea has caused arbitrage movements from Northwest Europe to Asia to come to a halt, sources said on Wednesday.

Several toluene cargoes were booked from Europe to the Middle East and India in November, as previously reported by S&P Global Platts.

The toluene spot price in Korea was assessed at $687/mt FOB Korea on Wednesday, down $35/mt since Monday.

Meanwhile, the spot price in Europe was assessed at $623.50/mt FOB ARA on Tuesday, up $15.50/mt.

“Korean prices have fallen quite a bit which is weighing on the European market,” a trader said on Wednesday. “Right now I don’t think anyone is working on a new cargo.”

A second trader reiterated that view, saying interest in exporting toluene from Europe to India seemed non-existent on Wednesday. “Last week at least one trader was working on a cargo to take there, but I don’t hear it anymore,” the second trader said, adding that the arbitrage to the US Gulf Coast area remains open.

“The arb to the US is still open and I imagine some producers will optimize their system and take product to the US…Demand is very low at the moment in Europe,” the source said.

Chemical demand for toluene in Europe has been under pressure for most of the fourth quarter, as two of the largest chemical buyers in Europe — BASF and Covestro — are both under force majeure at their Germany-based TDI plants in Ludwigshafen and Dormagen.

Demand for gasoline blending components in Europe is also subdued at the moment, largely because of seasonal demand patterns for gasoline blending, which normally bottoms out in December in the western hemisphere.

–Thordur Gunnarsson, thordur.gunnarsson@spglobal.com
–Edited by James Leech, james.leech@spglobal.com

http://www.platts.com/latest-news/petrochemicals/london/nwe-toluene-arbitrage-to-asia-takes-hit-as-korea-26621251