Rare trade sees European ethylene cargo sale into Asia despite shut arbitrage

27-Aug-14

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, as per traders in Platts. The 6,500 mt ethylene cargo from Sweden was sold at US$1485/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 2014. But since then the window between the two regions has remained shut. 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 $1520/mt CFR Southeast Asia. To be sold into Northeast Asia, it would cost another $30-40/mt for freight, taking the price to US$1550/mt CFR Northeast Asia. But current prices in Asia were much lower than that -- the CFR Northeast Asia marker was assessed at US$1530/mt and CFR Southeast Asia marker at US$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.