Both imported and domestically produced LPG prices plunged by around 5-7% in South and East China this week, weighed down by the recent slump in the international market, trade sources said Friday, October 17.Asian LPG prices fell to more than two-year lows Thursday, with the CFR South China refrigerated cargoes assessed at $706/mt for propane and $711/mt for butane, down by 10-13% from last Thursday’s $785/mt and $815/mt, respectively, Platts data showed.
Trade sources attributed the fall in Asian LPG prices to the recent sharp declines in international crude prices.
Front-month Brent crude futures settled at $84.47/b for the November contract Thursday, down by more than 6% from last week, and falling by around 20% from August 15.
In South China, propane-rich imported LPG was said to have traded at around Yuan 5,650-5,750/mt ($919.37-935.64/mt) this week, down by Yuan 425/mt or 7% from around Yuan 6,075-6,175/mt last week.
“The slump in international LPG prices this week was the main reason LPG prices wre dragged down in the domestic market, but increased imports in South China have also exerted downward pressure on LPG prices in the region,” a trader in the Pearl River Delta said.
Three imported LPG cargoes, totaling 60,000 mt, have arrived in southern China’s Pearl River Delta this week, according to data from Beijing-based energy information provider JYD Commodities Hub.
On top of that, LPG import terminal Zhuhai New Ocean was expecting to take delivery of a 20,000-mt imported LPG cargo Friday.
This will bring the region’s total LPG imports to 80,000 mt within a week’s time, compared with no LPG imports last week.
“Many local LPG import terminals bought more imported cargoes for second-half October delivery, [due to] the supply cut from CNOOC’s Huizhou refinery,” a second trader in the Pearl River Delta said.
“But when everyone thinks in the same way, things will turn bad. The increased imported arrivals have offset the supply cut from CNOOC Huizhou,” the trader noted.
CNOOC’s 12 million mt/year (240,000 b/d) Huizhou refinery in the region had shut Monday for a full turnaround of about two months.
The refinery normally produces around 1,400 mt/day of LPG, accounting for around 15% of total LPG production in Guangdong province.
Meanwhile, domestically produced LPG was said to have traded at around Yuan 5,575-5,675/mt in South China Friday, down by around Yuan 385/mt or 6% from a week ago, according to local trade sources.
The domestic grade was traded at Yuan 5,630-5,700/mt in the Pearl River Delta, and at Yuan 5,550-5,670/mt in east Guangdong Friday, trade sources added.
EAST CHINA PRICES ALSO DOWN ON BEARISH MARKET SENTIMENT
Prices of imported and domestically produced LPG also fell by 5-6% in East China this week, amid bearish sentiment in both domestic and international markets, local trade sources said Friday.
“Many buyers have held back from buying, in fear that the LPG prices will drop further,” a local trader said.
Third-tier LPG distributors were said to have been running on relative low inventories, monitoring the market movement this week.
“Our inventory was bought at around Yuan 6,200/mt, but the current price is only around Yuan 5,900/mt … the price dropped too fast,” said a second trader with one of the third-tier LPG distributors.
“And it will likely fall further as the import cost for later arrivals would be much lower,” the trader added.
Import cost for H2 November delivery refrigerated cargoes was estimated to be less than Yuan 5,100/mt on a CFR China basis, trade sources said.
Propane-rich imported LPG was heard to have traded at around Yuan 5,850-5,950/mt in East China Friday, down by around Yuan 350/mt or 6% from Yuan 6,200-6,300/mt last week.
Meanwhile, domestically produced LPG was said have traded at around Yuan 5,820-5,920/mt in the region Friday, also down by around Yuan 310/mt or 5% from a week ago, according to local trade sources.
Source: Platts
