21 November 2012 11:06 [Source: ICIS news]
LONDON (ICIS)--The European jet kerosene market remains short of prompt barges this week, despite refineries coming back online and product being fixed to mainland Europe, traders said late on Tuesday.
Barge differentials have remained above cargo differentials for the sixth consecutive week, despite barges usually being cheaper as they are sold on a FOB (free on board) basis rather than CIF (cost, insurance and freight).
There were eight barge trades in the five trading days between 14-20 November, with barge differentials at $85-87/tonne (€66-68/tonne) and cargoes at $77-79/tonne on Tuesday.
Market participants are divided on whether the tightness will ease in the coming week.
A broker said prompt barge availability remains tight, noting the dates and number of bidders in the open market trading window compared with offers.
However, an airline source said the supply side has loosened as a result of product entering Europe and refineries coming back online after maintenance.
Yet a trader said much of the product destined for Europe had already been placed.
“Product is disappearing into the buyers’ own supply,” the trader said. “Everyone is asking where is the two million or so tonnes of product we hear that has been fixed for Europe every month. It seems to be disappearing into a dark hole.”
Shipping sources noted around 358,000 tonnes of product fixed for the UK/mainland Europe from India and the Middle East for mid-to-late November loading dates.
Sources said despite the market briefly turning into a contango structure last week, there is still little incentive to store product, and buyers will continue to purchase barges on a hand-to-mouth basis.
($1 = €0.78)
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