China's monthly toluene imports suffered their biggest monthly decline for the year in September and October's volume is likely to come in at a similar level, data from China's customs department showed Tuesday.
     However, market participants expect toluene imports to increase significantly in November and early December due to the large number of parcels fixed in the past two weeks.
     China's toluene imports fell 68.5% or 5,595 mt to 2,571 mt in September, customs data showed. The country regularly imported 20,000-30,000 mt/month until August, when imports fell 16,628 mt or 67% to 8,166 mt on the back of high costs and lackluster demand that coincided with a plunge in toluene spot prices.
     Prices on the FOB Korea benchmark nosedived $706.5/mt or 60.6% between
the start of August and the start of November in tandem with a similar plunge
in crude oil and naphtha values in a period marked by high volatility.
     However, imports into China look set to rebound to normal levels in
November and December due to a large amount of trades over the past two weeks,
sources said.
     Market sources said 20,000-30,000 mt of toluene had been transacted on a
CFR China basis over the past two weeks for H2 November/early-December
arrival. Trades since the beginning of November have been done in a range of
$500-600/mt CFR China, inclusive of 90 days' credit.
     Importers include Zhejiang Grand, Shanghai Guomao, Topship and New
Jiyang, while sellers include Daelim Corp, Interchem, Mitsui, Hanwha, GS
Caltex and LG Chem, according to Platts data.
     GS Caltex was said to be the largest seller at 18,000 mt and Topship and
New Jiyang the largest buyers at around 10,000 mt each.
     Imports increased as international prices fell significantly below
domestic prices in October, generating healthy margins for Chinese
distributors.
     Local prices were Yuan 5,300-5,400/mt ex-tank Jiangyin/Zhangjiagang/
Nantong Tuesday, equating to $638-650/mt on an import parity basis --
$114.5-126.5/mt higher than import prices on the CFR China benchmark, which
were assessed at $523.5/mt Monday.
     Unusually, several buyers chartered their own vessels from China to South
Korea and return to buy on a FOB Korea L/C at sight basis, industry observers
said. Chinese importers usually buy spot material on a CFR China basis.
     Sources attributed this to ongoing credit issues, coupled with a series
of defaults by Chinese companies earlier in October, which have made spot
sellers reluctant to trade with Chinese companies.
     But with local supply tight, importers like Topship opted to charter
vessels to buy on an FOB Korea basis, relieving sellers of some risks and
liabilities, sources close to the company said.
     Trades into China were also done at slightly higher prices than FOB
Korea plus freight due to an inbuilt "risk premium," market participant said.
--Michelle Ho, Michelle_Ho@platts.com