June CP Sees Declines
The June propane CP was $600/mt, down $10/mt MOM. At the same time, the May butane CP was $570/mt, down $20/mt MOM.
In early May, the ongoing impact of the Sino-U.S. reciprocal tariff policy kept CP expectations and premiums elevated. However, following the release of the Sino-U.S. Joint Statement, the potential re-entry of U.S. cargoes into the Chinese market triggered market reassessments. This shift led to a modest dip in CP expectations alongside rising FEI, but premiums dropped notably. Given the tight supply in the Middle East and relatively high crude oil prices, the CP expectation remained firm in the second half of May. Besides, increased negotiations for U.S. cargoes drove lower CFR China compared to prior levels.
In May 2025, China’s LPG import arbitrage underperformed and became negative, and PDH unit profits further dropped. Influenced by the Sino-U.S. trade tariff, the spot premiums increased, and China’s LPG import costs averaged RMB 5,100/mt or so, up about RMB 100/mt MOM. Meanwhile, operating rates of alkane deep-processing units further dropped, so the imports at deep-processing enterprises dropped, and those at traders went up. More imported resources were arranged as civil-use gas. Meanwhile, China’s LPG commercial volume went up, and the demand for civil-use gas was sluggish. Accordingly, selling prices of imported LPG fluctuated downward, so China’s LPG import arbitrage became negative. In terms of the deep-processing profits, PDH unit profits underperformed with higher import costs and sluggish propylene market. Overall, China’s LPG import arbitrage was tepid, weighing on the downstream procurement enthusiasm, and most market participants adopted wait-and-see attitudes to the market.
Forecast: It is estimated that the July CP may go down. The June CP exceeds market expectations, and the overall market trading is sluggish. Accordingly, most market participants may adopt bearish attitudes to the market. Moreover, the LPG market in India and Southeast Asia may enter demand slack season, so the overall LPG demand may be mediocre. Besides, the U.S. cargos may re-enter China, intensifying the market competition. Overall, SCI reckons that the July CP may drop, and the decline may surpass $30/mt.
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