In the US Mont Belvieu market, one of the biggest supply points for liquified petroleum gas (LPG) in the world in recent years, butane prices gained sharply. With Enterprise Products Partners L.P., a major supplier for LPG and ethane, inaugurating operations of an isobutane dehydrogenation (iBDH) unit in January, domestic demand for butane increased. Further, butane demand to modulate vapor pressure of gasoline was also firm. From market research by Rim, butane prices as of Jan 27 were at about $345/mt, higher than the level at the beginning of the month, which was in contrast to propane prices that dropped by $40/mt from early January (See graph below).

Graph: Price movements in US Mont Belvieu for January 2020

Owing to a surge in butane prices, a market source at an Asian supplier said, "Fewer butane cargoes of US origin are likely to flow into the Far East in the future". On Tuesday, most market sources expected butane prices in the Aramco CP for February loading to be $40/mt above propane prices. In the paper market, however, views that butane supply might be tighter going forward caused the spread between butane and propane in the March Aramco CP swap to widen to $50/mt. For propane, the peak demand winter season would come to an end soon. Thus, butane prices were expected to move much higher than propane prices in the Asia market in March onwards depending on spot demand from India and Indonesia, major butane consumers.