A narrow propylene arbitrage from Asia to USA opens

28-Jan-13

A narrow propylene arbitrage from Asia to the US has opened this week with increased discussions between Asian producers and traders to fix cargoes, as per Platts. Discussions intensified late last week after Taiwan Formosa Petrochemical concluded a tender on Tuesday for a 10,000 mt H1-February loading cargo at US$1370/mt FOB Mailiao to a trading company. The tender was initially for a 1,500-3,000 mt cargo but the company received a bid for a 6,000-10,000 mt cargo at US$1370/mt FOB, a company source said. After much deliberation, the company decided to accept the bid. This is the second cargo Formosa sold to be shipped to the US. On January 15 the company sold a 12,000 mt parcel loading end-January/H1 February at US$1360/mt FOB Mailiao, for shipment to the US. The tender results send signals to the market of the viability to move cargoes to the US. A Chinese trader said that a 5,000 mt cargo was diverted to the US at US$1300/mt FOB Taiwan. Discussions continue despite issues in resolving the logistics. A South Korean producer who has 5000 tons to offer is in discussion with a Western trader who requires 10,000 mt. US spot polymer-grade propylene was assessed last Friday at 73.75 cents/lb (US$1625/mt). With freight estimated at US$300-350/mt, sellers would be able to make a maximum profit of around US$30/mt. Asian propylene was assessed Friday at US$1295/mt FOB Korea.