Feb CP Sees Slight Rises
The February propane CP was $635/mt, up $10/mt MOM. At the same time, the February butane CP was $625/mt, up $10/mt MOM.
The February propane and butane CP went up. The international LPG supply was tight. Therein, the LPG supply in the Middle East remained tight, and the propane stock in the U.S. kept declining due to the cold wave. It is estimated that the propane stock in the U.S. may further go down. China’s LPG import arbitrage performed well, so China’s LPG demand improved slightly. However, the improvement in civil-use gas demand in Asia was lower than expected due to the relatively high temperature. Accordingly, the overall LPG demand in Asia remained sluggish. China’s LPG demand improvement gave thin support to the international LPG market. Therefore, the increment in CP was also limited.
In January 2025, China’s LPG import arbitrage and LPG deep-processing profits performed well. The monthly average import arbitrage was RMB 170/mt in January 2025. The civil-use gas commercial volume at some state-owned refineries was low, and some importers cut procurement in the wake of the Spring Festival holiday. Accordingly, the overall LPG supply was not high. Meanwhile, downstream users needed to stock up before the holiday, propping up selling prices of imported LPG. China’s LPG import costs went down. Therefore, China’s LPG import arbitrage was relatively favorable in January 2025. China’s PDH plants experienced an average profit loss of RMB 120/mt in January 2025, narrowing RMB 155/mt. The January CP was low, so the propane import cost dropped somewhat. However, propylene prices were relatively high in the first half of January, backed by the strong international crude oil market. Accordingly, PDH unit profits recovered somewhat and even became positive sometimes. Entering the second half of January, the international LPG prices were high, lifting China’s propane import costs. With the approach of the Spring Festival holiday, propylene producers intended to cut selling prices to lower inventory, so PDH plants experienced negative profits again. Overall, China’s LPG import arbitrage improved in January 2025, supporting the import enthusiasm.
Forecast: It is estimated that the March CP may go down. The LPG demand in Asia may see minor improvements, weighing on the international LPG market. Moreover, it is estimated that the international LPG supply may rise, and the international crude oil prices are likely to go down, exerting bearish impacts on the international LPG market. Given the decline in the international crude oil prices and sluggish supply and demand fundamentals, it is predicted that the March CP may decline.
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