Market and product

LONDON (ICIS)--European toluene contracts for March have been confirmed at $1,125-1,127/tonne on a FOB (free on board) NWE (northwest Europe) basis, down $5-8/tonne from the previous month, as the initial settlements received further support from players on Wednesday.

One consumer initially confirmed it had settled March at $1,125/tonne with its suppliers. A producer later confirmed it had agreed all contracts within a range of $1,125-1,127/tonne, which was later confirmed by a consumer. A second supplier later said this morning that it has agreed March volumes at $1,127/tonne.

February saw price ideas for toluene fluctuate, with spot deals done as low as $1,112.50/tonne mid-month before some apparent tightness emerged ahead of March.

Deals were done last week at $1,133/tonne and $1,140/tonne, the latter of which in particular was notable as it was for 3,000 tonnes and bought by a supplier, suggesting limited availability in Europe for the forward market.

Traders had previously been angling to push European numbers lower in order to open up arbitrage opportunities into the US market ahead of the driving season.

There is talk that demand for toluene for blending purposes in the US appears to be building up earlier than usual this year, and a stronger uptake is predicted for March.

However, the upturn in the US appears to have stalled towards the end of February amid thin trading activity. The market in Asia dropped to a seven-and-a-half month low last week, but subsequently regained some of the ground lost as short covering helped boost price ideas.