27 July 2009 05:45 [Source: ICIS news]
By Peh Soo Hwee
SINGAPORE (ICIS news)--Asia has become an attractive destination for US ethylene cargoes as arbitrage opportunities have opened up due to regional spot prices rising to eight-month highs, industry sources said on Monday.
But deals could be hampered by long voyages and costly freight, sources added.
Last week's spot ethylene prices in Asia of $980-1,040/tonne (€686-728/tonne) CFR (cost and freight) northeast (NE) Asia were about twice as high as those in the US, according to global chemical market intelligence service ICIS pricing.
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Discussions were underway last week to sell a 9,000-tonne cargo from the
Potential buyers said
“The cargo will arrive only in second half September, so buyers will be hesitant to take decisions,” said one end-user.
The trader bringing in the cargo has the option to bring the material to
Spot prices in Europe rose €40-50/tonne ($57-71/tonne) to €740-770/tonne FD (free delivered) NWE (northwest
“We understand that the trader is still looking for more buyers, otherwise there is no deal,” said one buyer in northeast
Asia typically sources ethylene within the region or from the
Cargoes from the
Freight costs were also estimated at more than $300/tonne for a 4,000-5,000 tonne parcel and at around $250/tonne for larger cargoes, shipping and trading sources said.
Nonetheless, expectations of the prospect of deep-sea ethylene parcels to
“There’s not much upside for ethylene because most of the derivatives cannot sustain current prices,” said an olefins trader in southeast Asia.
“The only thing that could knock off ethylene prices would be a drastic drop in polyethylene (PE).”
PE spot prices, however, have remained firm. High density PE for film grade was up $20/tonne at the top end of the range last week, at $1,220-1,300/tonne CFR China.
($1 = €0.70)
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