Europe aromatics arb to US hit by lack of ships

09 September 2008 15:43  [Source: ICIS news]

LONDON (ICIS news)--Europe-based players in the aromatics and styrene markets saw strong arbitrage opportunities to the US but were frustrated by the lack of available shipping, they said on Tuesday.

 

“The arb to the US is open but there are no prompt vessels available to there and later vessels will be no help, as you would be buying September to try to sell into late September or early October,” explained one styrene trader.

 

European spot benzene was valued at $1,145-1,165/tonne (€813-827/tonne) CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp) for September and October loading on Tuesday afternoon, with styrene talked at $1,520-1,550/tonne FOB (free on board) Rotterdam for September loading.

 

Toluene was bid at $980/tonne FOB Rotterdam against notional bids of $1,020/tonne FOB Rotterdam.

 

In the US, meanwhile, markets had closed the night before with benzene valued at $4.25-4.35/gallon FOB HTC (Houston Texas Central), equivalent to $1,279-1,310/tonne FOB HTC, styrene at 78-80 cents/gallon FOB HTC, or $1,719-1,763/tonne FOB USG (US Gulf), and toluene at $3.70-3.75/tonne FOB HTC, or $1,125-1,155/tonne FOB HTC. 

 

These were respectively $134-145/tonne, $199-213/tonne, and $135-145/tonne higher than in Europe.

 

With shipping from Rotterdam into USG valued at $49-54/tonne, these differentials would suggest a clear arbitrage opportunity within September, players said, but the lack of available prompt shipping was a severely limiting factor.

 

“The last week or so, we have seen at least 20,000 tonnes of benzene load from Rotterdam into the US, and there is just not much space available,” said one trader.

 

Another trader said that 6,000 tonnes of toluene had loaded for US landing in the past week.

 

In August, benzene players had exploited an early September to September arbitrage window, with ships now loading bound west. 

 

This, traders said, meant that an even more profitable opportunity was due to be passed up, especially if further disruption was seen in the shipping lanes. 

 

In light of this, Hurricane Ike was seen to be strengthening on its way towards the Gulf of Mexico, according to reports.

 

($1 = €0.71)

 

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For more on benzene, styrene and toluene visit ICIS chemical intelligence

 

By: Peter Salisbury
+44 20 8652 3214

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