25 January 2013 12:26 [Source: ICIS news]
LONDON (ICIS)--A Taiwanese 10,000-12,000 tonne propylene cargo has been fixed to Europe amid much speculation as to the duration and possible pricing impact of the outage at the Naphtachimie cracker in Lavera, France, sources said on Friday.
The cargo, which will load in the second half of February, is one of three cargoes heard sold ex-Taiwan over the past week or two. The other two cargoes, due to load in the second half of January and the first half of February respectively, are destined for the US Gulf and/or East Coast Mexico.
Trader sources said that the selling prices of the cargoes - $1,360-1,370/tonne (€1,020-1,028/tonne) FOB (free on board) Taiwan - would mean a landed price of at least €1,200/tonne for Europe assuming freights in the mid-to-high $300s/tonne. Some variability on freights could push the landed price within a €1,150-1,200/tonne CIF (cost, insurance & freight) NWE (northwest Europe)/Med (Mediterranean) range, a couple of sources said.
Most players considered this a high price for the European market especially because of the forward timing, leading to a view among some that perhaps the cargo did not yet have a home.
“I have not encountered players - producers/consumers - who were willing to pay more than CP [contract price],” a trader said.
A second trader said it had seen no likely buyers at €1,200/tonne CIF adding; “several companies say they still need several kt [kilotonnes], but [there] is no price commitments.”
However, given the cargo’s expected arrival in March at the beginning of the crunch period in the cracker maintenance slate and the complications caused by the unplanned as well as unclear duration of the outage at the Lavera cracker, sources said the trader concerned could simply be positioning on expectations of higher prices.
“You never know how things develop, time will tell,” the first trader said.
Activity on the propylene spot market has been boosted in January largely because of the situation at Lavera. Spot prices which have languished below contract prices since the second quarter of 2011 apart from two very brief periods in 2012, are now closing the gap. Although there is talk that some P&C (private and confidential) deals have already been concluded at or above the current contract price €1,090/tonne FD (free delivered) NWE.
February contract price discussions are just getting under way and a settlement is expected next week.
($1 = €0.75)
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