The paraxylene market in Asia was relatively fuss-free from operational issues concerning delivery of cargoes for three months, but once again a few buyers missed the mid-month deadline to declare a port for delivery, while a few sellers delayed declaring laycans for February, all triggering delays, industry sources said Wednesday.
The nomination process in the Asian PX market involves declaration of the half-month laycan for delivery by the seller and the port by the buyer before midnight of the 15th of each month.
Sellers of at least eight cargoes -- which have gone through a chain of receiving port nominations by buyers -- had not received the port nominations by the deadline.
"Five of our cargoes did not receive a proper declaration as of Tuesday [January 16] morning, and our operator was up until 2 am chasing the buyers for a declaration," a Singapore trader said. Traders in Japan and China also reported the same problem.
PORT NOMINATIONS OUTSIDE CONTRACTUAL TERMS
In some cases, in spite of delivery terms on a CFR Taiwan/Ningbo/Dalian basis, some trading houses received nominations outside the contractual terms, with ports such as Zhuhai, Jiangyin and Gulei nominated, Singapore and Japan traders said.
"The cost of deviation to these ports is quite high in the case of cargoes from South Korea and Japan," another Singapore trader said.
"If the cargoes are coming from India or the Middle East, the longer delivery times [18-30 days] means it still is possible to amend the destination port on the bill of lading, but that is a very cumbersome process, and one that we might do on a case-by-case basis," the trader added.
"In the case of near-haul cargoes, which have a shipping time of at the most 2-3 days from loading to delivery, [changing the destination port mid-voyage] is very, very difficult. Also, delivering to a new/additional port on a ship that has been chartered for delivery to a port like Dalian incurs an additional charge of approximately $20,000," the trader said.
A source from a Singapore trading house said: "Our operator received the delivery port as Ningbo, following which the port was changed to Dalian, then back to Ningbo again."
As a workaround to this recurring problem, some companies have taken the step of having a default port like Dalian nominated in case of a delay in receiving the port of discharge, the source said.
As for why the process has started breaking down again, a Chinese end-user said: "Some companies have bought more than they can manage, and are now struggling to find homes for the cargoes."
Commenting on possible ways of mitigating the situation, a Singapore trader said: "Either there are more ports added in, if the market can arrive at a consensus on it, or the rules are changed altogether."
Separately, S&P Global Platts data showed that 39 February-delivery cargoes traded on the Platts Market on Close assessment process, with South Korea' GS Caltex buying 30 cargoes, Litasco buying seven cargoes, and SKGC Singapore and Total Trading Asia buying one cargo each.
On the sellers' side, Zhejiang Yisheng sold 17 cargoes, BP Singapore and OTI sold seven cargoes each, while Wanxiang Singapore sold six cargoes, and Litasco and Posco Daewoo sold one cargo each.
