China Propane Price to Move up in Q4, 2018

Recently, China’s propane prices inched down from high levels. Given the bullish factors, SCI reckons that China’s propane prices will increase obviously in Q4, 2018.

Up to August 24, China’s average propane price was RMB 4,425/mt, up RMB 476/mt or 12.05% Y-O-Y. As seen in the chart, China’s propane prices continued to rise from April but inched down in June. Although the demand for propane was sluggish in Q2, 2018, China’s propane market performed well.

Currently, the domestic propane supply remains relatively low due to the overhauls at refineries, but there are many ships scheduled to arrive in August. Moreover, although there are extra 25% tariffs on the U.S.-origin propane, SCI reckons that the propane import volume will remain high in Q4, 2018 while the import pattern changes to some extent. Besides, with the temperature getting lower, the demand for propane will rise gradually. Supported by the relatively high profits, traders will show strong interest in operating.

In July and August, the international crude oil prices fluctuated downward, having limited impacts on China’s propane market. Up to August, the average CP propane reached $533/mt, up 25.71% Y-O-Y, and the duty-paid cost of imported propane greatly increased accordingly. SCI predicts that CP propane will go up in Q4, 2018, giving strong support to China’s propane prices.

Besides, the demand for propane will obviously rises due the Mid-Autumn Festival and the National Day holidays. Therefore, SCI reckons that China’s propane prices will greatly grow from late September to early October. On the whole, China’s propane prices will move up in Q4, 2018.