Toluene arbitrage from Europe to US Gulf opens

04:55' PM - Thursday, 07/12/2017

The toluene arbitrage from Europe to the US Gulf opened up Wednesday, S&P Global Platts data shows, after production hiccups in the US Gulf and robust demand for benzene conversion in the region caused US toluene prices to surge this week.

The European spot price of toluene was last assessed at $686/mt CIF ARA Tuesday, stable from Monday. The spot price in the US Gulf was assessed at 250 cpg DDp USG ($760/mt) on Tuesday, up 5 cpg ($15.20/mt) on the day.

A healthy spread between benzene and toluene prices has facilitated healthy margins for benzene conversion processes for toluene disproportionation (TDP) and hydrodealkylation (HDA) in both Europe and the US.

"The arbitrage to the US is wide open now," a European trader said Wednesday, adding that any molecules in Europe that could be purchased for less than $700/mt could be taken to the US profitably, given current freight costs.

A second market source, however, said toluene supply in the US Gulf was likely to increase in the second half of December, therefore rendering the attractiveness of the arbitrage unclear. - Platts -

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