LPG: Oct 5-9: Prices surge on tight supply/demand and rising crude
CFR Far East
The CFR Far East market extended considerable gains last week due to tight supply/demand and rising crude prices. Rim Asia Index for propane and butane as of Oct 8 was at $431.00 per metric tons (/mt) and $461.00/mt respectively, down $43.25/mt from Oct 2. Since Hurricane "Delta" was expected to approach the US Gulf Coast, loading operations of cargoes ex-US were likely to be delayed. As a result, sellers in the CFR Far East market were apparently checking the supply/demand situation and refrained from actively offering. Thus, buyers had no choice but to raise their bids. Propane prices for November delivery to Japan were at a premium in the mid $20's/mt to the November CP.
FOB Middle East
The November CP forecast was revised up to about $410/mt for propane and about $415/mt for butane due to anticipation of increasing demand as well as rising crude prices. Qatar Petroleum for the Sale of Petroleum Products Company Limited (QPSPP) issued a sell tender that would close at 12:00 Doha time on Oct 14 with bids valid until 17:00 hours on Oct 15. Offered in the tender was a Nov 12-14 loading 45,000mt propane cargo. QPSPP could accept bids on a CFR basis as well. Further, some 44,000mt 50:50 cargoes for November loading were reportedly offered at flat to the November CP. Spot supply was not tight but buying interest was strengthening. In fact, a European trader was seen to have bought a 44,000mt 50:50 cargo for mid-October loading from Ras Tanura from a Middle Eastern trader at a fixed price last week.
Asia Pressurized Market
On FOB South China, talks were muted due National Day holidays. Nevertheless, with bullish sentiment heightening that the November CP might be considerably above the October CP, importers seemed to prefer selling cargoes for November loading rather than October loading. For CFR Vietnam, along with a recovery in domestic demand in Vietnam, one importer from Haiphong entered discussions with term suppliers in order to increase term cargoes for delivery to South Vietnam by small quantities.