Jan CP Sees Declines
The January propane CP was $625/mt, down $10/mt MOM. At the same time, the January butane CP was $615/mt, down $15/mt MOM.
The January propane and butane CP went down. The international LPG supply was ample. Therein, the LPG supply in the Middle East was ample, and that in the U.S. was relatively high due to the open Panama Canal. However, the international LPG demand was normal. The demand in Japan and South Korea remained sluggish, and China’s LPG demand was lower than expected. Most market participants adopted cautious attitudes to the LPG market, and the overall market trading was scarce. With the approach of the month end, traders intended to sell goods preferentially, dragging down premiums. Therefore, the international LPG prices fluctuated downward.
As of December 27, 2024, China’s LPG import arbitrage was positive, and the monthly average import arbitrage was RMB 93/mt. The December CP remained unchanged, but China’s LPG import costs moved downward in the wake of declines in premiums. In December, some state-owned refineries cut sales volume of civil-use gas, so the impacts on the import market weakened. However, the end demand saw limited improvements, hindering the increments in selling prices of imported LPG. Accordingly, selling prices of imported LPG fluctuated within a narrow range in December 2024. Influenced by the decline in import costs, China’s LPG import arbitrage became positive.
Forecast: It is estimated that the February CP may inch up. The LPG supply may give strong support to the market due to the LPG supply decline in the Middle East and beyond-expected cold wave in the U.S. However, the relatively high international LPG prices may hinder the downstream operation enthusiasm. Moreover, the international crude oil prices may see frequent fluctuations, giving thin support to the international LPG spot prices. Overall, it is estimated that CP may hover at $630-635/mt, and China’s LPG import costs may be about RMB 4,900/mt.
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