The arbitrage window to move polypropylene cargoes from China to Southeast Asia has opened on paper, but no cargoes have been booked so far for the voyage, traders said Wednesday.
Demand for PP is weak in China ahead of the long Lunar New Year break in February, with prompt cargoes seen offered at $1,420-1,430/mt CFR China Wednesday morning. Cargoes imported mostly from the Middle East, and stored at bonded warehouses in China [which makes them free of import tax], were seen offered at $1,440/mt on an ex-warehouse basis in China, but the offers attracted no bids, a trader said.
In Southeast Asia, on the other hand, cargoes which have not come from the ASEAN countries, were seen traded at $1,510-1,520/mt CFR basis, traders said.
Factoring in logistics costs estimated at around $25-30/mt at Chinese bonded warehouses and shipping costs of $20-40/mt from Chinese main ports to Southeast Asia, sellers would be able to make a profit of around $10-25/mt on paper.
But no cargoes have been sold yet, traders said, as demand remained soft in Southeast Asia.
"Indonesia is facing floods [so has no demand]. Materials are not going out of [Indonesian] warehouses [into the market] fast enough and that has dampened some of the local demand," an Indonesian trader based in China said.
"[I am] quite sure there are re-exports [the imported cargoes moving from China to Southeast Asia] happening but ... I have not heard much," a trader based in Vietnam said.
