China LPG Weekly Summary (20191018-20191024)

SCI99

2019-10-25

China LPG Weekly Summary (20191018-20191024)

1. Market Price

Remarks: The daily prices in the above table are the weekly closing prices on Thursday. W-O-W change calculations are based on weekly average prices. Civ is short for civil-use, R4C2 is short for C4 raffinate II, Imp is short for imported cargoes, Set is short for settlement price.

2. Market Review

Up to October 24, China’s weekly LPG prices averaged RMB 3,890/mt, down RMB 118/mt or 2.94% week on week.

This week, China’s LPG prices were stable-to-dipping, and the overall trading atmosphere was average. With the temperature getting lower, the demand for low-pressured civil-use gas weakened somewhat. Moreover, the mixed alkane dehydrogenation unit at Dalian Hengli Petrochemical took overhaul, weighing down the market prices. The decline in the LPG prices was limited, as the inventory at most refineries was rational. Besides, the prices of oil-blending feedstock continued to decline, dragging down the C4R2 prices. In order to alleviate the inventory pressure, most producers cut the selling prices to promote sales.

3. Market Forecast

International crude oil: Next week, it is estimated that the international crude oil prices will hover at highs. The crude oil stocks in the U.S. declined due to the decrease in the import and the rise in the export, giving thin support to the international crude oil market. Moreover, the bullish impacts from the crude oil output reduction will gradually weaken, exerting limited support to the international crude oil prices. Therefore, it is estimated that the international crude oil prices will slightly decline at first and then hover at highs.

Supply: Next week, the unit at Zhuhai Zhongguan Petrochemical will take overhaul, so the LPG supply in South China will inch down. Other units will run steadily. On the whole, SCI reckons that China’s LPG supply will remain largely unchanged.

Demand: With the temperature getting lower, the demand for butane will gradually weaken. Moreover, the ethylene unit at Dalian Hengli Petrochemical will be put into operation, so the n-butane supply will decline somewhat. On the whole, the overall demand for civil-use gas will be moderate. Currently, China’s C4R2 supply is low, and the prices of oil-blending feedstock mainly hover at RMB 5,000/mt. Accordingly, it is estimated that the demand for C4R2 will be relatively stable.

Market sentiment: Next week, the international crude oil prices will slightly decline at first and then hover at highs, giving thin support to the LPG market. Given the moderate demand, most market participants adopt optimistic attitudes to the LPG market.

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