Jan 2023 China LPG Import Arbitrage Performed Well
According to SCI’s data, China’s LPG import arbitrage performed well and gradually enlarged in January 2023. As of the end of January, China’s LPG import arbitrage once reached around RMB 1,000/mt, and the monthly average import arbitrage was about RMB 420/mt. It is estimated that China’s LPG import cost will rise notably in February, and selling prices of imported LPG may be lower than China’s LPG import costs. Although the overall LPG demand is likely to recover gradually in February, downstream users may show resistance to high-priced resources. Accordingly, it is predicted that China’s LPG import arbitrage may become negative sometimes.
The international crude oil and LPG prices increased.
The international crude oil prices declined rapidly at first and then rose slowly in January, and the WTI crude oil prices hovered at $75-80/bbl. Moreover, the decline in January CP came in short of expectations, giving support to the overall market sentiment. At the same time, the international LPG prices saw notable increments. It is estimated that the overall LPG supply will shrink due to the refinery and port maintenance in the Middle East. Meanwhile, the demand for LPG in China and India was favorable. Accordingly, the international LPG prices increased dramatically. Besides, the notable increment in February CP gave support to the overall market sentiment.
China’s imported LPG selling prices went up.
China’s LPG import arrivals were relatively low in January, so the imported LPG resources at some importers in East China and South China were insufficient. Moreover, downstream users showed strong interest in stocking up in the wake of the New Year’s Day and the Spring Festival holidays. Accordingly, selling prices of imported LPG remained firm in H1 January. Influenced by the low transportation efficiency and tepid demand, China’s imported LPG selling prices went down during the Spring Festival holiday. Afterwards, the international LPG prices saw notable increments, and the February CP rose dramatically, supporting the overall market sentiment. Moreover, with transportation efficiency recovery and downstream replenishment after the holiday, selling prices of imported LPG kept rising. As of January 31, 2023, the mainstream selling price of imported LPG in the Pearl River Delta was about RMB 6,110/mt, up RMB 635/mt from January 20. On the whole, China’s LPG import arbitrage performed well in January, as China’s LPG import costs were low but China’s imported LPG selling prices went up.
In the near future, it is estimated that China’s LPG import cost will rise notably in February, and selling prices of imported LPG may be lower than China’s LPG import costs. Although the overall LPG demand is likely to recover gradually in February, downstream users may show resistance to high-priced resources. Accordingly, it is predicted that China’s LPG import arbitrage may become negative sometimes.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
