Asia LPG Prices Decline Amid Narrowing Naphtha-LPG Spread

The latest report from S&P Global Commodity Insights reveals significant movements in the Asian LPG market, with notable price declines across various regions and products. As of July 9, 2024, Asian LPG prices have experienced a decrease of $4.50 per metric ton (mt) compared to the previous day. This decline has been observed in both propane and butane prices across North Asia and South China.

Key Highlights:

1. Price Reductions:

• Propane: The front-cycle H1 August delivery was assessed at $647/mt, down $4.50/mt from July 8. Similarly, H2 August delivery stood at $644/mt, also reflecting a $4.50/mt decrease.

• Butane: H1 August butane was assessed at $632/mt, down $4.50/mt, and H2 August at $629/mt, showing the same reduction.

• The price changes are consistent across North Asia and South China, with both regions seeing a drop in LPG prices.

1. Trading Activity:

• Significant bids were reported during the end-of-day trading session. Glencore's bid for a 23,000-mt propane cargo for H2 August delivery at $643/mt and SwissChemGas's bid for H1 August delivery at $644/mt were the highest.

• Trafigura placed a bid for a 46,000-mt propane cargo for H2 August delivery to China at $642/mt, indicating active trading in larger cargo sizes.

• BP offered a 23,000-mt butane cargo for H2 August delivery at $631.80/mt.

1. Market Dynamics:

• The differentials for August delivery cargoes against the front-month Saudi Aramco CP swap were stable at $63.50/mt for H1 and $60.50/mt for H2 August.

• The spread between Mean of Platts Japan naphtha assessments and August FEI propane swaps narrowed to $57.75/mt from $58.75/mt, indicating a slight tightening in the market.

1. Middle Eastern and European Market Trends:

• The August Saudi Aramco propane contract price swap fell to $583.50/mt from $588/mt, while the August-September CP swap spread narrowed to -$7.50/mt.

• In the European market, the propane FOB Northwest Europe seagoing price fell by $7/mt to $603/mt, and butane saw a more significant drop of $12/mt to $581/mt.

1. Tenders and Trading Activity:

• Indian Oil Corp issued a term tender for three 45,000-mt evenly-split LPG cargoes to be loaded over January-March 2025.

• Increased butane demand in Turkey has influenced market dynamics, supported by good availability and low premiums.

Conclusion:

The Asian LPG market is currently experiencing a period of price adjustment with significant decreases acros

s various regions. This trend is influenced by stable differentials to the Saudi CP swap, active trading, and slight market tightening indicated by the naphtha-LPG spread. The European market also reflects similar downward trends, emphasizing the interconnected nature of global LPG trading.