Dwindling Iranian OX supplies direct buyers to secretive tenders
Singapore (Platts)--22Nov2010/627 am EST/1127 GMT
Tenders for orthoxylene in Asia are seeing an enhanced interest from
traders and end-users, even as producers floating such tenders are becoming
increasingly secretive, industry sources said last week and Monday. Most of
these tenders are being won by South Korean traders who are trying to cope
with their OX supplies from Iran drying up.
"The tenders at CPC have seen a higher participation recently," a source
at Taiwan's CPC Corp. said. The source however, refused to divulge details on
exactly how many companies participated in its two recent tenders.
Taiwan's CPC awarded two OX tenders recently. Last Friday, it awarded
a long-term tender, that will see the sale of 36,000 mt of OX on a formula
prices over 2011 to a South Korean trader. The company sold 3,000 mt of OX,
which would load in second half of October, through a tender on October 15 to
a South Korean trader. Both CPC and the company that allegedly won the tender
declined to confirm any details.
Thailand's PTT Aromatics and Refining Public Company Limited, or PTTAR,
sold an estimated 2,000 mt of OX to a South Korean trader on November 12.
Requests made to the official concerned at PTTAR to provide the details of the
tender and the name of the company it has been awarded to, met with no
Industry sources said that the two OX tenders in Asia have seen higher
participation since Iranian cargoes became difficult to obtain since the
middle of this year. Until June this year, about 10 Iranian cargoes, measuring
1,000 mt each were delivered at Indian ports. Since June however, the number
more than halved to three of four. This month, Indian buyers of OX said that
they are not getting any Iranian cargoes.
Industry sources said that Indian banks who are concerned about
continuing their business in the US have stopped honoring L/Cs for Iranian
cargoes. In June this year, the US tightened its grip on Iran through a new
set of sanctions.
Iran exported 3,058 mt of OX into South Korea in August and the figure
plunged to zero in September and October, following sanctions announced by
South Korea against Iranian entities like Petrochemical Commercial Company on
Iranian OX cargoes into South Korea have flowed intermittently throughout
this year, suggesting a reluctance among South Korean buyers to buy cargoes
from Iran. South Korea buys OX to feed its massive downstream phthalic
anhydride plants. In addition, South Korean traders sell OX into China.
CPC Corp. and PTTAR are the only companies in the region that sell OX
through a tender. Though the bidding process so far has been dominated by
South Korean traders, end-users from as far as India are now looking forward
to participate in the tender.
"We are looking at OX tenders in Thailand with an interest," said a
source at India's IG Petrochemicals Limited, the largest buyer of OX in India.
"We are trying to be a part of tenders in Thailand," a source at Singapore
based Kempar Energy said.
CPC and PTTAR, the two companies in Asia that sell OX through a tender
have become very secretive about the entire process. OX traders polled across
Asia said this may have to do with requests from buyers who want to keep their
bid a secret.
"CPC and PTTAR may be avoiding the details of their OX tenders to keep
the prices a secret. The prices at which these tenders are awarded
more-or-less set the floor for OX prices in Asia. They may be doing this in
the interest of the buyer whose interest after having secured the cargo would
be sell it at a higher price," a Singapore based trader said. Illustrating
this point, a South Korean trading company that won the CPC tender on October
15, for sale of 3,000 mt of OX at $1,135-1,145/mt FOB Kaohsiung later offered
the same cargo at $1,200/mt CFR China the following week.
--Shashank Shekhar, firstname.lastname@example.org
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