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Toluene arbitrage from Europe to US Gulf opens

London — The toluene arbitrage from Europe to the US Gulf opened up Wednesday, S&PGlobal Platts data shows, after production hiccups in the US Gulf and robustdemand for benzene conversion in the region caused US toluene prices to surgethis week.

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

A healthy spread between benzene and toluene prices has facilitatedhealthy margins for benzene conversion processes for toluenedisproportionation (TDP) and hydrodealkylation (HDA) in both Europe and theUS.

"The arbitrage to the US is wide open now," a European trader saidWednesday, adding that any molecules in Europe that could be purchased forless than $700/mt could be taken to the US profitably, given current freightcosts.

A second market source, however, said toluene supply in the US Gulf waslikely to increase in the second half of December, therefore rendering theattractiveness of the arbitrage unclear.

--Thordur Gunnarsson, thordur.gunnarsson@spglobal.com

--Edited by Jonathan Fox, jonathan.fox@spglobal.com