China LPG Import Arbitrage Underperformed in H2, 2020
In H1, 2020, China’s LPG import arbitrage performed well, and the highest import arbitrage even surpassed RMB 4,000/mt. However, in H2, 2020, China’s LPG import arbitrage remained negative due to multiple factors.
In H1, 2020, influenced by the public health event, the international crude oil prices crashed, weighing down the international LPG prices. At the end of February, China’s LPG import cost declined to RMB 1,500/mt or so. Although China’s LPG prices went down, the decline in China’s LPG prices was lower than that in the import cost. Therefore, the overall LPG import arbitrage performed well from end-February to mid-May.
After mid-May, the international LPG prices trended flat, and the overall import cost hovered at RMB 3,000-3,500/mt from H2 May to H1 October. Meanwhile, China’s selling prices of imported LPG resources were RMB 3,100-3,600/mt. Given the operation cost, China’s LPG import arbitrage remained negative in H2, 2020.
