13 July 2012 05:56 [Source: ICIS news]
By Andrea Heng
The prices of SN500 cargoes started falling over the last two weeks from $1,160-1,200/tonne (€951-984/tonne) CFR (cost & freight) UAE (United Arab Emirates) during the week ended 28 June to $1,050-$1,100/tonne CFR UAE in the week ended 12 July, a decline of nearly 10%, according to data from ICIS.
Buyers’ indications are at the low $1,000s/tonne CFR UAE, with some targeting prices at the mid-$900s/tonne CFR UAE because of the recent influx of competitively priced European cargoes, resulting in an open arbitrage window.
Group I prices in
A cargo of more than 5,000 tonnes of Europe-origin Group I base oils of a high viscosity index (VI), comprising SN150, SN500 and brightstock, was offered in the previous week to both
A separate 4,000 tonne cargo of Europe-origin Group I high VI material was heard to be offered to both regions at $1,020-1,040/tonne CFR, but there were no deals concluded, according to market sources.
Despite the presence of the cheaper European cargoes, buying interest was weak as customers in the UAE prefer to wait for Iranian refiners Sepahan Oil and Iranol Oil to announce fresh offers in the next 10-14 days.
“We offered the 4,000 tonne cargo to the UAE from a major supplier in
A second trader said: “Traditionally, the two majors in
According to market participants, the situation is expected to worsen in the near term with the approach of Muslim fasting month of Ramadan on 20 July-19 August, which will result in a production slowdown in line with weak end-user consumption.
The difficulty in shipping Iranian product as a result of the reaffirmed sanctions from 1 July has added to the slow trade.
“The downtrend will continue into the next month and most buyers are going to place indications at below $1000/tonne CFR UAE for SN500 cargoes,” a Dubai-based buyer said.
Traders in the UAE with some inventory of SN500 are considering liquidating their higher-priced cargoes, which were purchased prior to a shutdown at Sepahan’s
“Buyers are asking for $1,140-1,160/tonne ex-tank Sharjah, but it will be difficult as our margins will be squeezed if we sell at anything at below $1,180/tonne ex-tank Sharjah,” a trader said.
With pressure from buyers and lower-priced cargoes from
Most have taken a wait-and-see approach as the two suppliers are expected to issue fresh tenders in the next two weeks.
($1 = €0.82)
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.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections