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LPG: Jul 1-5: Butane demand recovers but prices down on ample supply

2019/07/08 07:00

CFR Far East

   The CFR Far East market fell last week due to plentiful supply. In particular, supply/demand for August delivery to China slackened. Thus, discussion levels for first-half August delivery to South China declined to a premium of $40/mt to the August CP although spot freight rates for Middle East-Far East rose to around $80/mt. For delivery to Japan, a 23,000mt propane cargo  for first-half August delivery was traded at a level equivalent to $410/mt last Wednesday. On the demand side, some Far East importers felt that prices were reasonable and showed interest to buy pure butane cargoes. Last Thursday, one Korean importer bid for a 23,000mt butane cargo for first-half August delivery at a level equivalent to $407/mt.

 

FOB Middle East

   The August CP was expected to be at $365-370/mt for propane and $345-350/mt for butane. A Kuwaiti and Qatari producer conducted sell tenders for four cargoes in total for July to September loading. Further, one Indian importer was moving on reselling a 44,000mt 50:50 cargo for July loading from Qatar. Thus, spot supply was plentiful. Under this situation, deals for propane and butane were seen to be possible at a discount of $10-20/mt to the August CP.  

 

Asia Pressurized Market

   On second-half July loading from South China, with bearish views emerging owing to weakness in the crude market, some refrigerated cargo importers reduced their offers to a premium in the high $50’s/mt to the July CP. On the other hand, for delivery to Vietnam, a recovery in domestic demand caused one Vietnamese importer to have buying interest for second-half July delivery. 

 

Japan Domestic Market

   The Japan domestic market lost last week. As bearish views heightened along with receding demand in summer and weak crude prices, some dealers with cargoes on hand rushed into spot sale. In the truck market in Keihin, talks for July lifting were reported at Yen 48,000-48,200/mt for propane and butane.

 

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