This could be good news if West-East arbitrage in general becomes more difficult.
During Q1 and the first few weeks of the second quarter, big quantities of US and European aromatics, olefins and derivatives were shipped to Asia as a result of much-stronger prices in this region compared with the West.
The Western producers (and, of course, the traders who seem to have done very well) benefited greatly from being able to relieve inventory pressures.
Volumes would have been even greater if it hadn’t been for vessel re-positioning issues and delays caused by increased piracy off the coast of Somalia.
But now the risk is that further big West-East volumes are fixed for arrival after May.
June-July will see cheaper naphtha and increased petrochemical supply, creating the potential for across-the-board price corrections that could be made a lot worse by continued high levels of deep-sea cargoes.