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LPG: Sep 2-6: Prices gain further on increase in demand for cargoes ex-MEG

2019/09/09 07:00

CFR Far East

The CFR Far East market extended gains last week. This was because the expected October CP was revised up on the back of rising crude prices and firm buying interest for cargoes ex-Middle East. Nevertheless, discussion levels for pure propane cargoes for first-half October delivery to Japan were at a premium of $3-6/mt to the October CP, significantly lower than current freight rates for Middle East-Far East by about $50/mt. Ample supply of cargoes ex-US limited the magnitude of gains. Rim Asia Index on Sep 5 was at $388.75/mt for propane and $401.25/mt for butane, up $11.50/mt and $14.00/mt respectively from the previous week ending Aug 30. Owing to increasing spot demand from India and Indonesia for cargoes containing butane, butane prices gained more sharply than propane.

 

FOB Middle East

The expected October CP was revised down to $343/mt for propane and $353/mt for butane last Monday due to weak crude prices but a rebound in crude prices as well as a recovery in spot demand for FOB Middle East cargoes thereafter caused it to increase to about $360/mt for propane and about $370/mt for butane. In the spot market, some traders with term supply commitments to India and Indonesia seemed to show buying interest for 44,000mt 50:50 cargoes for October loading. Although these traders bid at a discount of $1-2/mt to the October CP, few active sellers were observed in the market. Most Middle East gas producers faced no selling pressure at the moment. Further, many players taking term cargoes from the Middle East were cautious to resell them in the spot market until the acceptances for October loading from Middle East gas producers were released and the supply situation became clear.

 

Asia Pressurized Market

In the FOB South China market, one refrigerated cargo importer was not keen on selling second-half September loading as the expected October CP was revised up on the back of rising crude prices and growing demand for cargoes ex-Middle East. Under this situation, discussion levels for September loading was at a premium of $50-55/mt to the September CP. In the CFR Vietnam market, one importer from Haiphong considered buying second-half September delivery at a premium in the low $90’s/mt to the September CP.

 

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