2020 China LPG Futures and Spot Market Comparison
In 2020, China’s LPG basis enlarged at first and then narrowed. Therein, China’s LPG basis enlarged in Q2, 2020 and n0arrowed in Q3, 2020. At the end of Q4, 2020, China’s LPG basis became positive. Moreover, the largest basis was RMB -1,180/mt, appearing at the end of May 2020.
The LPG basis enlarged in Q2, 2020, as the delivery time of dominant contract was in November and market participants adopted bullish attitudes to the LPG future market due to the traditional demand peak season. The low prices of LPG futures kept rising. Meanwhile, influenced by the demand slack season and the public health event, China’s LPG spot prices fluctuated within a narrow range. Accordingly, the LPG basis enlarged. Entering Q3, 2020, China’s spot supply became tight, so China’s LPG spot and futures prices went up. With the supply recovery and tepid demand, China’s LPG spot prices trended flat. Meanwhile, the market expectation weakened, dragging down China’s LPG futures prices.
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