For the Quarter Ending June 2021
The North American LPG market continued to rally upwards throughout the second quarter after observing a marginal downfall during the first half. Continuous strengthening of the brent Crude Oil maintained kept the offers considerably raised. Brent Crude oil prices were averaged at USD 73 per barrel in June with an increment of USD 5 per barrel from the prices in May. Demand was consistent from the household applications, whereas recovered industrial infrastructure in the US Gulf region surged the offtakes for the industrial purposes. Prices in the US market consistently improved throughout the quarter with quarterly average of LPG prices assessing at USD 221 per tonne, showing an increment of USD 16 per tonne in the second quarter of 2021.
As the winter season ended in the Asia pacific region, LPG demand slowed comparatively to the previous quarter due to lesser heating demand with the arrival of the summer season. However, increasing focus over the industrial, household applications and for the electricity generation (specially in Japan) backed by recovering trade dynamics supported the material availability. Softening North Asian heating demand ahead of summer and healthy supply to Asia from the US and Middle East in June. Saudi Aramco’s contractual prices of Propane and Butane in June were assessed around the range of USD 500-515 per tonne and USD 495-510 per tonne, with an increment of USD 20-35 per tonne from the prices in May.
The European LPG was mainly concentrated across the domestic consumers amid rising demand from the industrial applications and household uses along with the electricity generation applications. The market noted a sharp economic rebound after the vaccine roll-out spread optimism which further supported the overall LPG consumption. Supplies were ample as the distribution was balanced from the Middle East after a marked delays in the Asian cargoes. LPG prices in Germany were averaged at USD 210.6 per tonne in the second quarter of 2021, with the overall pricing showing a slight decline during quarter.
For the Quarter Ending March 2021
Due to severe freezing weather in the US Gulf region, LPG supplies were limited in the first half of the quarter. The Gulf freeze catastrophe in the United States heightened the supply related constraints as demand for heating purposes surged and many major production facilities in the region experienced manufacturing disruptions due to the cold weather. The price of Liquefied Petroleum Gas (LPG) in the North American region rose dramatically because of increased demand and sluggish supply, even though the average quarterly price of LPG stood around USD 1665/ton.
LPG supplies in the Asia Pacific region were balanced throughout the first quarter of 2021, owning to the start of a new olefin facilities in China in which 77% of the demand is driven by LPG, followed by the PDH (propane - dehydrogenation) plants in China operating at maximum efficiency. However, temporary operational halts due to the Chinese New Year holidays and production cuts by the OPEC nations showcased some tightness in the supplies. The demand spiked as the winter season hit the northeast Asian region. A leading supplier to the South-eastern region, Saudi Aramco revised its March prices of LPG ratio (50% Propane – 50% Butane) to USD 610/ton and (70% Propane – 30% Butane) to USD 616/ton, registering an increment of +USD 70/MT and +USD 48/MT, from the January settlements.
LPG supplies in the region remained constrained, as imports from the US declined due to inclined domestic demand of the US gulf region. Demand for heating applications rose supported by extreme weather conditions which hit the Northwest European region during the quarter. A major supplier from the Middle East announced a multi-fold increment in the prices of LPG with the offers surging further by increased transportation charges.
For the Quarter Ending September 2020
The Asian LPG demand became resilient in the quarter ending September 2020 as the industrial offtakes improved with plants operating at their full capacities to recover the slumped margins due to pandemic. As majority of Southeast Asian countries cater to their LPG demand through imports, stagnated imports due to Hurricane Laura in the U.S. shrouded the regional buying activities. LPG is anticipated to partially tumble in the coming months with China eyeing to shift the household consumption to piped natural gas. However, several traders are likely to stockpile LPG ahead of the winter season under fears of supply shortage that can interfere with consumer sentiments.
Outlook for LPG considerably improved in August with its increased preference over Naphtha as an industrial feedstock due to the sudden rebound in the Naphtha values. However, with Propane-Naphtha spread decreasing by the end of September, total imports of Northwest Europe showcased a prominent drop by over 10 per cent as compared to August. The fall in offtakes of LPG as a petrochemical feedstock was primarily due to its high prices causing manufacturers switch to other alternative to protect their margins. Furthermore, resurgence in coronavirus in early September has raised serious concerns over the prevailing demand uncertainties in the next quarter.
As many Middle Eastern countries buoyed on increasing the supply of LPG for power generation systems amidst the aggravating heat of August, several companies including ADNOC considerably increased the production output with no substantial increment in the trade flows. The company deviating from its usual service allowed advanced stock purchasing on increased demand from importers. ADNOC agreed to the nominations granting advanced local dates for consecutive two months starting October. Traders perceive this as a smart move that would set the middle east fuel market at optimum and organized inventory levels.