Nov CP Rises from High Levels
The November propane CP was $635/mt, up $10/mt M-O-M. At the same time, the November butane CP was $630/mt, up $10/mt M-O-M.
The November propane and butane CP further increased from high levels. First, the civil-use gas demand in India was strong, lifting the LPG spot prices. Second, the LPG supply from the Middle East was not high in the wake of crude oil production cut and the delay of raising crude oil production, supporting LPG prices. With the port maintenance in the U.S. coming to an end and the decline in international crude oil prices, the LPG import cost from the U.S. to China dropped, and the LPG import arbitrage from the Middle East to China became negative.
As of October 29, 2024, China’s LPG import arbitrage remained negative, and the monthly average import arbitrage was RMB -187/mt. China’s LPG import costs went up M-O-M. Meanwhile, China’s LPG import arrivals surpassed 3,000kt, so the supply of imported LPG was ample. Some state-owned refineries sold more civil-use gas resources to the market, hitting the import market. Moreover, the end demand was lower than expected, so selling prices of imported LPG dropped from high levels in October. Overall, China’s LPG import arbitrage remained negative in October 2024.
Forecast: It is estimated that the December CP may remain high. With temperature declining, the demand for civil-use gas in Asia may improve. Therein, the civil-use gas demand in India may continue being strong. China’s LPG demand from the PDH industry may be relatively stable. However, considering that the LPG import arbitrage from the Middle East to China is negative, and China’s PDH plants experience severely profit losses, the increments in December CP may be limited.
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