Scarce demand, transport curbs and increased capacity in China lower toluene imports

28-Jul-08

Asia's largest toluene importer, China has reduced imports due to a limited domestic demand, transport restrictions and an expected rise in supply of toluene from the newly added domestic plants. Lackluster demand seen in the previous two months due to seasonal fall in demand, continues, and is hardly expected to revive. The estimated drop in imports from 2007 to 2008 was about 15,000-20,000 tons, with last year's average monthly imports pegged at about 40,000 tons. Infact, the traders are eyeing customers in other countries like Taiwan, South Korea and Southeast Asia and were even considering exporting to the US due to the slowdown of demand in the China market. The transportation restrictions imposed from July 1 on chemicals across Beijing, Qingdao, Tianjin, Shanghai, Qinghuangdao and Shenyang due to Olympics also played a part in reducing demand for imports, the traders said. Apparently, toluene required to be transported via certain specified routes in north China, after obtaining special permission certificates from the government which are difficult for the small traders and end users to obtain. In this scenario, China is inching towards self-sufficiency by adding capacities with three new toluene plants to feed the domestic markets. In May, Zhoushan Hebon Chem Co Ltd kicked off the 150,000 tpa toluene plant, expecting to feed the key eastern China market. While Dalian Petrochemical in northeast China will produce 450,000 tpa of toluene, Sinopec subsidiary Qingdao Refining and Chemical's toluene would be used as oil-blends.