Refinery turnarounds in the US are expected to be supportive for the European toluene market going forward into October, market sources said this week.
The toluene arbitrage from Northwest Europe to the US Gulf Coast is open on paper at the moment.
The European spot price of toluene was assessed at $529/mt FOB ARA for the 5-30 days loading forward assessment on Thursday, while front-month toluene prices in the US Gulf Coast were $583.68/mt FOB USG on Wednesday, S&P Global Platts data shows.
The spread between the two regions therefore stands at $54.68/mt, while freight costs for 5,000 mt parcels are currently heard around $30/mt, potentially netting traders a profit of $24.68/mt given current spot prices.
Two Europe-based toluene buyers noted that refinery turnarounds in the US Gulf Coast region could potentially result in toluene moving across the water from Europe.
"Traders are calling me up to see if I have inventory to sell," said one of the buyers. "The arbitrage from Europe to the US seems promising."
In the first seven months of the year, 137,847 mt of toluene was exported from the EU, Eurostat data shows, rising 5.2% from the same period last year.
On Wednesday, the toluene premium to the Eurobob gasoline swap was assessed at $65/mt and $70/mt for September and November, respectively.
Another European toluene buyer speculated that premiums could push higher going forward into October on the back of export demand to the US.
