LPG: Dec 2-6: Prices rise on tight supply/demand
CFR Far East
The CFR Far East market rose last week due to tight supply/demand. The Rim Asia Index rose to $503.50/mt for propane and $520.25/mt for butane as of last Thursday, up $4.50/mt and $8.25/mt respectively from Nov 29. Since the arrival of cargoes ex-US was delayed due to congestions in the Panama Canal and four cargoes had been previously traded on a CFR Indonesia basis, the number of sellers for pure propane cargoes ex-US gradually decreased. On the other hand, several traders were seeking pure propane cargoes to cover their short-positions. These buyers bid up in pursuit of sellers. Regarding butane, although demand for even-split cargoes for January delivery to Japan emerged, there were no sellers in the market. As supply/demand for even-split cargoes was tighter than that for pure propane, butane prices gained more sharply than propane.
FOB Middle East
The January CP was expected to be at around $445/mt for propane and around $460/mt for butane, above the December CP as of the morning on Dec 6. The FOB Middle East market rose due to perceptions of increasing demand. One European trader was seeking an even-split cargoes for early January loading in order to meet its term supply commitments for CFR Southeast Asia. On the other hand, several sellers apparently moved to sell January loading. These sellers were said to offer even-split cargoes for January loading at a premium level to the January CP, expecting that demand from India and Indonesia might emerge and Chinese players might move to procure ahead of the Lunar New Year holidays. Further, recent weakness in freight rates was also cited as a bullish factor.
Asia Pressurized Market
For FOB South China cargoes, one refrigerated cargo importer with a terminal in Dongguan could sell second-half December loading at a premium in the low-mid $60's/mt to the December CP. On the other hand, there were no active buyers. In the CFR Vietnam market, one Korean player could reportedly sell second-half December delivery at a premium in the low $90's/mt to the December CP. Buyers, however, were not interested in purchasing at this level.