NW Europe/US butane arbitrage opens to $15/mt

28 July 2006 18:32  [Source: ICIS news]

LONDON (ICIS news)--The US arbitrage opened for butane this week, offering a net-back of around $15/tonne for trans-Atlantic shipments, industry sources said on Friday.

European butane prices were assessed at $560-565/tonne cost insurance freight (CIF) Northwest Europe (NWE) on Friday for field-grade material, softening $10/tonne from last week, according to global chemical market intelligence service ICIS pricing. At the same time, US butane prices were reported at a premium of around $60/tonne.

Freight rates for a 40,000-45,000 tonnes cargo were close to $45/tonne, leaving a net result of $15/tonne.

There had previously been problems securing discharging slots in the US Gulf region, but these could now be circumvented through contracts, reducing the risk of shipping a cargo across the Atlantic.

The European butane market has recently been kept in balance by a combination of tight supply and little demand. However, the US arb could pull butane from NWE and push European prices upwards.

The price differential between Europe and US for toluene has left the arbitrage wide open, as spot prices remained firm in both regions this week.

Industry sources, however, said the NWE/US arbitrage for propane has fallen this week to $5 from $20/tonne.

By: Jorn Steffensen
+44 20 8652 3214

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