24 February 2009 06:01 [Source: ICIS news]
By Salmon Aidan Lee
SINGAPORE (ICIS news)--The ?xml:namespace>
Last week, PX spot prices in Asia dropped as much as $60/tonne (€46.8/tonne) to $850-860/tonne CFR (cost and freight) Taiwan on strong buyers’ resistance, almost on par with European values of $830-860/tonne FOB (free on board) Rotterdam.
But the price gap between both regions could widen again soon attracting cheaper cargoes from Europe to come into Asia, traders said.
“The price drop last week was just temporary, as [prices] had again risen yesterday… demand remained strong,” said a trader based in Singapore, referring to Monday’s PX rebound to $880/tonne CFR Taiwan in open-market trading.
Between December and January, at least 12 parcels of spot PX were sent to Asia from Europe, when the price gap between the two regions yawned to more than $100/tonne, with its widest at about $185/tonne in late January.
With Europe-to-Asia freight rates estimated at around $80-90/tonne, the arbitrage window opened then and Asian PX end-users snapped up the European material as they faced shortages within Asia.
As such, several end-users in Asia were hopeful that more European – and other deep-sea cargoes – could come their way in March or April, as regional supplies could remain curtailed by shutdowns.
In Taiwan, CPC Corp’s idled No 3 line could restart by April, but will remain shut in March due to poor returns of benzene.
“If we take into consideration all these, and the fact that many downstream plants will like to produce more given good margins, then I think PX could remain tight and prices could rise further,” said a trader with Macau-based Winsway Trading.
“We’d definitely like to produce more, but we cannot deny that PX is an issue,” said a source from Sinopec, an integrated producer and owner of Yangzi Petrochemical in eastern China.
Against such a backdrop, PX prices in Asia could again rise towards $900/tonne CFR Taiwan or more, while there was little incentive for European values to follow given relative stability in the West.
“We’re looking to move more [European] cargoes into Asia for April,” said an international trader with presence in both continents, while confirming that he had earlier sold two European parcels for March delivery into China.
Another trader who sold at least one parcel for April also confirmed such intentions. “It’s not only Europe… Middle Eastern material has also come [to Asia] and even US, Israeli cargoes can come over,” said another international trader with offices in Singapore and Europe.
($1 = €0.78)
Truong Mellor contributed to this story
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