US MEG exporters were offering cargoes to China as part of an annual inventory reduction to avoid paying annual county inventory taxes in Texas of 2.75%, industry sources said Wednesday.
Specifically, companies in Texas are assessed a 2.75% tax in certain counties -- including Harris County, where the Houston Ship Channel is located -- on December 31 of each year on held inventory. As such, many corporations destock and maintain minimal volume at the end of the year.
"Suddenly, I'm being offered lots of US cargoes for January and February arrival," a source in Asia said.
Traders differed on the amount of MEG heading to Asia, with estimates of between 15,000-50,000 mt.
Offers for US cargoes were heard in a range of $1,115-1,130/mt CFR China, which would mean a netback to the US Gulf of about $1,030/mt FOB (46.72 cents/lb) given freight, profit, and credit costs.
One US producer was heard to be offering an export cargo at 52 cents/lb FOB, but this was said to be too high for Asia, Europe, or Mexico.
"Every year this happens," a domestic supplier said, "I think it's a great time to buy and store it anywhere but Texas."
