May CP Sees Declines
The May propane CP was $610/mt, down $5/mt MOM. At the same time, the May butane CP was $590/mt, down $15/mt MOM.
International LPG prices exhibited significant volatility in April, with marked differences between the first and second halves. This divergence primarily stemmed from the reciprocal tariff policy announced on April 4, which triggered an immediate global price plunge. Given that 60% of China’s LPG imports originate from the U.S., market participants grew concerned about future demand. Following the policy announcement, international markets underwent broad corrections, with the FEI crashing below $400/mt. As market sentiment evolved and trading activity intensified, Chinese traders pivoted to Middle Eastern suppliers, driving up CP expectations and premiums. However, the FEI and MB prices remained subdued. By late April, persistently high FOB Middle East pushed MB prices upward. As of the end of April, assessments for second-half May cargoes indicate CFR reaching $640-650/mt.
In April 2025, China’s LPG import arbitrage remained positive but the LPG deep-processing profits underperformed. Influenced by the tariff escalation, selling prices of imported LPG rose notably, and those in some regions saw increments of RMB 500-600/mt. Accordingly, China’s LPG import arbitrage once reached RMB 600/mt. Given the favorable import arbitrage and high import arrivals, sellers cut selling prices to promote sales. Therefore, selling prices of imported LPG went down, and China’s LPG import arbitrage declined to about RMB 100/mt. As for the LPG deep-processing profit, the PDH unit profits dropped by about RMB 297/mt MOM. The international LPG prices went down and then rose rapidly, so China’s propane import costs went up. Meanwhile, China’s propylene market underperformed, as the overall propylene supply was ample.
Forecast: It is estimated that the June CP may go down. The May CP exceeded market expectations, resulting in prohibitively high procurement costs and dampening traders’ procurement enthusiasm. Additionally, significant adjustment potential in international supply and China’s LPG deep-processing demand may foster cautious trading sentiment. Considering the evolving supply-demand dynamics and lack of supportive market drivers, SCI anticipates a downward adjustment in June CP.
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