Thin markets were overshadowed this week by Benzene movements. Toluene is nominally up and ranges from 413-430 cpg, while September is backwardated and ranges from 385-410 cpg. Commercial grade values have risen to 390-395 cpg on a nominal basis. Blendvalue is calculated at 415 cpg on a pipeline basis with RBOB basis at 379 cpg. Alternative values are showing nominal breakeven values for TDP economics, while STDP benefits from higher Benzene and Para-Xylene values. The adjacent graph illustrates the inflated values surrounding gasoline, as all measures surrounding gasoline have trebled in value since May of this year. Increasing Crackspreads generally means toluene prices will move up. Blendvalue has been erratic, and the unusual spread over gasoline has made this a very poor predictor of price since the beginning of driving season.
Sale of material for export to South Africa and supply restrictions on the Rhine, allied to higher prices in other regions, have pushed prices back up to around the $1200 mark. $1165 was confirmed done and $1180-$1185 is rumored to have transacted. On Friday afternoon, offers were posted at $1235. The market is now tight. Restrictions on movements into and out of the Odfjell Rotterdam terminal are limiting liquidity and logistical flexibility.
The spot market has been stable in spite of strong Crude/Naphtha sentiments. Spot price ranged $1115-$1140 FOB Korea for September during the week. Price peaked on Tuesday at $1130-$1140 FOB with support by crude increase. Then, slightly down to $1115-$1130 during mid-week. Spot players not been active due to uncertainty of market direction and holiday in Singapore. Outright deals were done at $1125 and $1135 FOB Korea October on Tuesday and $1127 FOB Korea for September on Wednesday. September/October spread deal done at $5 as backwardation on Monday, but the spread has been almost flat during the week. There is a little change on spot market on Friday and down to the range of $1110-$1120 for September/October FOB Korea. Demand for operable TDP remains stable while demand for HDA is still at a minimum. China domestic price has improved a little to Rmb 8425 ($1110) that is $15 increase from last week level with inventory stable at around 80 KT. In economics, the spread over naphtha down to $180 mainly due to naphtha price increase during end of the week.
Production from Asian Crackers has been generally increasing except in Japan and China. There is no cracker shut down in Korea and operations are healthy. SEA crackers are operating at around 90-95%. In Japan, Keiyo Ethylene crackers have restarted after 10 days shutdown due to mechanical glitch, but JX Kawasaki cracker had 45 days of turnaround from mid-August. In China, Sinopec/Sabic Tianjin has a planned cracker turnaround from 2H August for 40 days and Yangzi PC, Sinopec Tianjin Co. also has planned turnaround during August/September.
Production from reformers has been healthy with strong gasoline crack margin except some turnarounds. In Taiwan, FPCC #2 Aromatics in the midst of turnaround until end August and CPC has plans for reformer turnaround in August together with #2 TDP. In Japan, JX Mizhushima had to shut refinery for minimum 3 months and TDP in Chita also down. SE Asia TPPI remains down. One Korean reformer has plan for turnaround from end of September for 40-45 days.
The adjacent graph compares global toluene prices plus US blendvalue so far in 2012. Note that Asia does not track blendvalue as efficiently due to having a higher percentage of toluene production coming from NCC’s/pygas compared to refineries. Sentiment is also different in the East; as a number of producers run for the purpose of producing petrochemicals. By comparison, most of US producers run for the purpose of making fuels with petrochemical production seen as a secondary process. The rising value of USBV kept US toluene price relatively stable despite sharp drop of crude/naphtha price from early May and that opened arbitrage widely from Asia. With this situation, more than 35 KT of toluene was exported from Asia to US during June/July, but export justification has been getting difficult from August due to backwardated US price trend and Asian internal demand increase. As gasoline season closes in US, arbitrage will remain closed to the end of the year despite prompt US price base; arbitrage looks open on paper though.