Oct CP Rises from High Levels
The October propane CP was $625/mt, up $20/mt M-O-M. At the same time, the October butane CP was $620/mt, up $25/mt M-O-M. The international LPG supply and demand fundamentals were key drivers influencing international LPG prices.
The October propane and butane CP increased from high levels. First, the civil-use gas demand in India gradually became strong, lifting the LPG spot prices. Second, the LPG supply from the Middle East inched down in the wake of crude oil production cut, supporting LPG prices. Third, the loading in the U.S. was delayed due to the hurricane and port maintenance.
As of September 27, 2024, China’s LPG import arbitrage remained negative, and the monthly average import arbitrage was RMB -107/mt. China’s LPG import costs went up M-O-M. Meanwhile, China’s LPG import arrivals remained high, so the supply of imported LPG was ample. Some state-owned refineries sold more civil-use gas resources to the market, hitting the import market. Moreover, the end demand was lower than expected, hindering the increment in selling prices of imported LPG. Overall, China’s LPG import arbitrage underperformed in September 2024.
Forecast: It is estimated that the November CP may remain high. With temperature declining, the demand for civil-use gas in Asia may improve. Therein, the civil-use gas demand in India may continue being strong. Moreover, the LPG supply of the Middle East and the U.S. may increase somewhat. Given the overlapped bearish and bullish factors, it is estimated that the November CP may be relatively stable. SCI reckons that China’s LPG import costs may remain over RMB 5,200/mt, supporting China’s domestic LPG market.
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