Arbitrage window to move Asian propylene cargoes to US opens after at least one year

04-Oct-14

The arbitrage window to move Asian propylene cargoes to the US appears to have opened, with a 12,000 mt FOB Taiwan cargo heard moving West for the first time, as per sources in Platts. Taiwan's Formosa Petrochemical sold a 12,000 mt H1-October-loading cargo at US$1300/mt FOB Mailiao to a trading company through private negotiations. Market sources said the cargo is set to be discharged in the US mid- or H2 November. The last time a cargo moved from Asia to the US could not be confirmed, but market sources said it was at least 12 months ago. A Southeast Asian trader said the cargo was sold at "closer to 67-68 cents/lb as it is a November cargo." Another market participant said he had heard it was concluded at 68 cents/lb, equivalent to US$1499/mt. The average freight is now US$250/mt but the 12,000 managed to move at $140/mt," the Southeast Asian trader said. Another source said that freight to move from Asia to the US could be US$200-250/mt for a 12,000 mt refrigerated cargo, while it could be over US$300/mt for lower volume cargoes of 5,000-10,000 mt. He added that it is possible that a newly launched vessel was chartered and so there was a huge discount [with the deal concluded below US$200/mt]. "Freight is US$250-280/mt but that level is a one-way price. If the charterer is doing a round trip there may be some discount," a Northeast Asian trader said. The exact spot price for the refrigerated cargo could not be confirmed but if the US$140/mt freight rate was indeed concluded, the South Korean trader could have a profit of nearly $60/mt.