News Code : 44624

 

HIGHLIGHTS

Transportation demand picks up

MTBE FOB ARA prices improve

High stocks in toluene, methanol, benzene

Petrotahlil - European aromatics and methanol prices have seen only a marginal impact from slow demand recovery, and several markets are likely to continue facing high inventory pressure.

"Blenders are waking up," a toluene producer said, following a recovery in transportation fuel demand.

As Europe's five biggest economies ease travel restriction, road traffic was nearing pre-pandemic levels in June, data from Apple mobility showed.

After hitting multi-year lows mid-March, average driving activity in the week to June 13 in France, Germany, Italy, Spain and the UK was 96% of January 13 levels, based on direction routing requests, according to the data, up from 76% the prior week.

Improving demand for toluene in Europe, however, was not strong enough to provide much price support, as the storage capacities remained high, according to market participants.

Toluene premiums to Eurobob gasoline for June and July were assessed at $65/mt June 12, up $3/mt week on week, while S&P Global Platts Toluene CIF ARA Month 1 was assessed at $400.25/mt, down $21.75/mt.

Balance-of-month Eurobob gasoline price changes every day, the producer said, and as it goes down, the premiums goes up.

Nevertheless, a narrowing gasoline contango has cooled market players' drive to store toluene for the future dates, as the strategy became less profitable.

"June-July differential is around $15/mt, which is your storage costs," the producer said.

MTBE demand improves

Meanwhile, more positive signs were seen in MTBE. Firmer buying interest in the week to June 12 resulted in an uptick of flat prices, though that was somewhat capped by the drop in upstream energy markets and level of stocks.

Buying interest from refineries was improving and weighted on the reduction of the significant excess of product in the market built the past month, as driving activity was picking up, according to producer.

"I doubt the market is long right now," the producer said.

S&P Global Platts assessed MTBE at $432/mt on June 12, bringing the weekly average to around $443/mt. This was up from the $441.50/mt average in the first week of June but 20% higher than the $369/mt May average, Platts data showed.

MTBE premium to the front-month -- July -- Eurobob barges swap jumped to $83.75/mt on June 12, from $72.75/mt on June 11.

The gasoline-naphtha spread, an indication of demand for high octane components trended higher on the week started on June 7, and averaged at $19/mt, up from $4.7/mt seen in the first week of June.

In methanol, the feedstock used in the production of MTBE, fundamentals were weak as inventory levels were still on the high side and contractual offtake was still slow, with end-users running at lower rates.

Despite that, some support was seen from higher demand from MTBE and biodiesel in Europe as well as from methanol-to-olefins units in China, sources said.

Other sources said Europe will eventually see the impact of lower global methanol production and upcoming planned maintenance, but it will take time for the market to balance as buyers look to draw down inventories.

Benzene struggles with oversupply

The European benzene market had been oversupplied before the COVID-19 pandemic and increased crude volatility hit the market. These two demand destructors kept stocks high through March and April, before arbitrage paths to both the US and to Asia opened in May.

Significant tonnage has leaving Europe along these routes, sources said, with Asian exports continuing into June and pegged around 20,000-30,000 mt so far.

The 5-30 days forward delivery assessment for benzene was assessed at $371.50/mt CIF ARA on June 12, keeping the uptrend in place since mid-April. Neither arbitrage path was seen as open on the day.

Downstream, styrene markets have suffered from mixed inventory indications and weak downstream demand.

While stocks were said to be high for distributors and traders working from tanks, producers have indicated low stock levels and low production runs to match.

Producers have been seen stepping into the spot market the last few days, indicating a greater draw on third party storage could be expected this month.

The weak demand environment has seen styrene prices struggle to keep a margin over benzene. The spread between the two was $209.75/mt on June 12 and narrowed over the week. That followed a brief period of recovery over the $250/mt margin indicated as the typical market accepted margin, following a protracted period less than $250/mt since June 2019.

Platts 

END 

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