Asian toluene tumbles $38.50/mt to 8-month low as China market reopens amid dearth of demand

Asian toluene hit a near eight-month low Tuesday after tumbling $38.50/mt in the first two days since China markets reopened after an extended Lunar New Year holiday.

The FOB Korea marker was assessed down $4/mt day on day at $607/mt Tuesday, after tumbling $34.50/mt on Monday, reflecting the pent-up impact on prices of the coronavirus outbreak on demand. The marker was last assessed lower on June 10 last year at $605/mt.

Toluene is mainly used as an octane booster in China, where road transport has been significantly curtailed in a bit to curb the spread of the virus.

"No petrol station open; you can't top up," an aromatics trader in China said.

"Domestic [China gasoline] demand is sure to drop but the short-term worry is how supply will be affected by the virus," a second trader said.

With inland transportation networks closed and trucks and trains unable to deliver, some local market participants said they were grappling with excess toluene inventories at ports.

Sources said there had been port closures due to high stockpile levels, but noted term supply toluene cargoes were also slated to arrive soon.

Slow-moving vessel traffic along waterways due to stringent health checks was also hindering logistics.

There was market talk that the earliest berthing date for vessels arriving at Jiangyin port was February 13, a gasoline-aromatics trader said.

"Vessels in Shandong province are unable to travel to Jiangsu province," a fourth trader said.

State-owned China Petroleum and Chemical Corp., or Sinopec cut its toluene list price in east China to Yuan 5,150/mt Tuesday from Yuan 5,450/mt, equating to $627.90/mt on an import parity basis, based on a US dollar/yuan exchange rate of 6.9779, which was up 1.7% from before the Lunar New Year.