The spread between benzene and toluene hit a 13 week-high on Tuesday, as benzene exports from Northwest Europe in October reduced length in the spot market.
At the same time, toluene spot prices have slid downwards this month, in line with lower gasoline prices.
The European spot price of toluene was assessed at $545/mt FOB ARA on Tuesday, while benzene spot prices were assessed at $645/mt FOB Rotterdam.
One of toluene’s largest downstream destinations in Europe is conversion to benzene via hydrodealkylation or other processes yielding the same result.
Typically, a $200/mt spread is needed between the two products for the conversion to break even after costs have been included.
Since toluene-to-benzene conversion has not been profitable since last year, incremental chemical demand for toluene has been subdued.
As a result, toluene spot prices have been determined by its gasoline blend value and spot parcels usually change hands at a price determined as a premium over the gasoline swap.
Toluene can be used as a high-octane gasoline component, as it’s RON rating is around 129.
On Tuesday, the toluene premium over the November gasoline swap was assessed at $110/mt for loading in the first half of the month, while the premium for second half of November dates was assessed at $80/mt.
The benzene market has recovered from a historic low price, and the lowest seen this year, when the market was assessed at $527/mt CIF ARA on September 15.
Benzene market sources have reported an improvement in derivative demand as styrene consumption has increased with a majority of styrene plants for the first time this year, without any supply interruption.
“Demand in November is OK — better than in September-October,” a styrene consumer said Tuesday.
In addition, exports, with more than 10,000 mt having left for the US market, have added further support to benzene spot prices.
Reformate and mixed aromatics exports from Northwest Europe to Asia have kept toluene premiums firm for prompt loading for most of this month.
Market participants, however, widely expect toluene premiums to come off towards the end of the month, as exports to Asia are expected to cease.
