South China LPG Prices to Rise in Future
By the end of September, sellers in South China cut selling prices, and the overall LPG price once dropped to RMB 2,650/mt, stimulating the downstream procurement. However, influenced by the relatively high import cost and the increment in October CP, the LPG prices in South China kept rising after the National Day holiday.
As of October 11, civil-use gas prices in South China averaged RMB 3,188/mt, down RMB 817/mt or 20.40% Y-O-Y and up RMB 95/mt or 3.06% from 2016. Moreover, the average price of civil-use gas increased by RMBB 742/mt or 30.34% from the lowest level in 2020.
Here are reasons for the LPG price increment in South China. First, propane and butane October CP went up, lifting the overall import cost. Second, sellers in South China cut selling prices to promote sales before the National Day holiday, so LPG prices in South China dropped to low levels. After the holiday, most sellers greatly raised selling prices, backed by relatively high import cost and favorable downstream replenishment. Finally, there were few import arrivals, so the inventory at sellers was relatively rational. Recently, some sellers controlled sales volume, lifting the overall LPG selling prices.
Entering October, offers at some enterprises increased by RMB 400-550/mt, and the overall downstream sentiment was fairish. As for the surrounding market, the LPG supply in Central China will tighten, giving support to the LPG prices in Central China. Moreover, although the temperature gradually declines, the overall demand for LPG is still lower than that in past years. In the short term, SCI reckons that LPG prices in South China will inch up. In the long run, most market participants will adopt bullish attitudes to the November CP, so it is estimated that the import cost will greatly rise from October. With the steady improvement in demand, it is predicted that LPG prices in South China will fluctuate upward.
