A rare European origin ethylene cargo was sold into Asia late last Friday for end-October delivery despite a shut arbitrage between the two regions, said traders Tuesday.
The 6,500-mt ethylene cargo from Sweden was sold at $1,485/mt CFR Southeast Asia to a buyer who had immediate requirements to fulfill, said sources adding that it was likely to be a one-off trade and no influx of European material would be taking place.
Europe is typically net short in ethylene and such trades are rare. The last time European material was sold into Asia was in mid-April this year.
But since then the arbitrage window between the two regions has remained shut, added sources.
Given that the CIF Northwest Europe ethylene marker was assessed at $1,280/mt Friday, the FOB Northwest Europe price should be around $1,220/mt, according to Platts calculations.
There was no assessment for the CIF NWE ethylene marker on Monday as Platts’ London offices were shut due to a public holiday.
Considering a freight of at least $300/mt from Europe to Southeast Asia for 9000 mt cargoes, the 6,500-mt ethylene cargo would fetch a price of $1,520/mt CFR Southeast Asia.
To be sold into Northeast Asia, it would cost another $30-40/mt for freight, taking the price to $1,550/mt CFR Northeast Asia.
But current prices in Asia were much lower than that — the CFR Northeast Asia marker was assessed at $1530/mt and CFR Southeast Asia marker at $1495/mt Friday. Besides, the Asian ethylene market was backwardated especially for Northeast Asia, as most regional steam crackers are expected to return from turnarounds starting in October.
So this rare movement is likely to be a one-off and the Asian market is not going to see huge volumes of European material flowing in, said one China-based end-user.
“It is unlikely that European cargoes will come in huge volumes like what happened in the first quarter this year [when around 60,000 mt of European ethylene was exported to Asia],” he said.
– Platts.com
