Iran C2 may skip Asia as Europe beckons

14 June 2007 09:47  [Source: ICIS news]

By Nurul Darni

SINGAPORE (ICIS news)--Rapidly falling ethylene prices in Asia and a widening gap between prices in Europe and Asia may push Iranian cargoes to the West to take advantage of more lucrative prices, industry sources said on Thursday.

“Iran’s exports for June-loading are unlikely to land in Asia as prices have been sliding in the past two weeks or so,” an ethylene trader based in Seoul said.

Iran Petrochemical Commercial Co (IPCC) was heard to be eyeing an outlet in Europe for its cargo loading in the last week of June, market sources said.

IPCC - the commercial arm of state-owned National Petrochemical Co - last sold one ethylene parcel for loading in the first week of June to Romania.

“It makes more economic sense to ship Iran material to the West now,” a Singapore-based broker said, adding that Iran would give Asia a miss this month as it could benefit from higher prices in Europe.  

Prices of ethylene in Europe were quoted at $1,250/tonne (cost and freight) CFR in the week ended 8 June. By contrast in Asia, ethylene spot prices have slid to $1,130/tonne CFR SE (southeast) Asia over the same period, widening the gap in favour of European prices.

Increased ethylene capacities in Taiwan and South Korea, unmatched by demand, continued to exert downward pressure on Asian prices in the past two weeks.

Formosa Petrochemical Corp’s (FPCC) newest 1.2m tonne/year cracker and Asia’s biggest has increased its operating rate to over 80% with stable on-spec production.

Ethylene prices in Europe, on the other hand, have been buoyed by persistent tight supply situation, with no expectation of easing in the near term, traders said.

Iran is the biggest Middle East petrochemical producer after Saudi Arabia and regularly exports ethylene cargoes monthly to Asia, Qatar or India.

By: Nurul Darni
65 6789 4359

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