EPCA ’08: Europe traders struggle with US arbitrage

28 September 2008 15:28  [Source: ICIS news]

MONTE CARLO (ICIS news)--Traders are still finding the arbitrage window logistically difficult to work, although a major European styrene consumer is moving 10,000 tonnes of material to the US to cover lost volumes, a trader source said on Sunday.

 

Speaking on the sidelines of the European Petrochemicals Association’s meeting, a Europe-based industry source said its company had lost significant volumes in the US while plants were temporarily shuttered in the face of Hurricane Ike.

 

It had previously been difficult to move material into the US because of a tightness of available space on ships moving west, with much capacity taken up by volumes of benzene contracted on an arbitrage window seen open in early September, the first trader source said.

 

Other traders said it had been logistically difficult to move aromatics or derivatives into the US following Ike.

 

It was not possible to move material to the US profitably because of logistical issues, a trader source said.

 

“Once you get material to the US, you have to move it inland, and freight it somehow,” he added.

 

On paper, players said, an arbitrage window remained technically workable. 

 

October loading styrene was valued at $1,480-1,500/tonne (€1006-1,020/tonne) FOB (free on board) Rotterdam at the close of business on Friday in Europe. 

 

In the US, the front month market was valued at $0.74-0.78/gallon FOB USG (US Gulf), equivalent to $1,631-1,719/tonne FOB USG. 

 

The $151-219/tonne spread between the two markets showed clear arbitrage opportunities, players said, with shipping from ARA (Amsterdam, Rotterdam, Antwerp) into USG valued at $77-80/tonne but no other fixtures had yet been heard.

 

The four-day EPCA conference ends on Tuesday.

 

($1 = €0.68)

 

To discuss issues facing the chemicals industry visit ICIS connect

By: Peter Salisbury
+44 20 8652 3214

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 27 October 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly