CPC increases tender volumes on firm toluene demand

Taiwanese state-owned refiner CPC has concluded another tender to sell five 3,000t toluene cargoes for September loading.

The tender was done yesterday on a fob Kaohsiung basis at a premium of $13-15/t to fob South Korea assessments. The cargoes are likely heading to China, India, the Middle East and southeast Asia.

This is the second time this year CPC has concluded five toluene cargoes for a month. It usually sells two to three cargoes on a monthly basis via a tender. It sold five cargoes in July for August loading on a fob Kaohsiung basis at a premium of $10-15/t to fob assessments.

Toluene demand has been steady for the past two months amid low inventories in China. Firm gasoline demand was largely led by refinery shutdowns in southeast Asia. Petron's 180,000 b/d Bataan refinery shutdown in the Philippines resulted in most producers using toluene as a blendstock and selling gasoline instead, causing a shortage of toluene.

Toluene supplies may lengthen in the coming quarter amid squeezed margins in the production of paraxylene (PX) in the toluene disproportionation (TDP) process. Most PX producers are watching their TDP margins closely, with discussions in the market to cut back TDP operating rates because of unprofitable margins. Downstream PX prices fell to a two-year low yesterday, settling at $792/t on a cfr China basis.