For the Quarter Ending September 2024
North America
In Q3 2024, the Liquefied Petroleum Gas (LPG) market in the US region experienced a period of decreasing prices, followed by an uptrend. During July 2024, the US LPG market experienced a significant price surge due to supply disruptions and increased production costs. Production setbacks, primarily stemming from high crude oil prices and the looming threat of hurricanes, curtailed LPG output.
A contributing factor to the tight supply situation was the decision by refineries, including LyondellBasell's Houston facility, to prioritize petrochemical production over LPG due to operational challenges. This strategic shift further reduced LPG output, intensifying the supply crunch.
However, the LPG market declined significantly during August 2024 due to a rebound in exports. The hurricane's impact led to a slowdown in production activities, but as operations resumed and maintenance activities concluded, export volumes surged in August 2024. Moreover, the decline in natural gas prices has reduced demand for LPG, as the two fuels are often used interchangeably. This decreased demand has further contributed to lower LPG prices during September 2024.
APAC
The third quarter of 2024 has seen a challenging environment for Liquefied Petroleum Gas (LPG) pricing in the APAC region, characterized by increasing prices and market volatility. During July 2024, Saudi Aramco, the state oil producer, kept its official selling prices (OSPs) unchanged for LPG which affected the Asian market. However, the market has significantly rebounded during August 2024, despite supply constraints and geopolitical tensions. These factors have led to a complex pricing landscape, with prices experiencing significant fluctuations throughout the quarter. Likewise, a decrease in US butane exports further tightened the market dynamics. Production setbacks and the looming threat of hurricanes curtailed LPG supply from the USA to Asia. The Persian Gulf-Japan route, a vital corridor for LPG trade, has experienced a significant drop in shipments due to a lack of spot LPG bids from Middle Eastern producers, leading to increased prices during September 2024. The latest quarter-ending price for Butane CIF Shanghai in China stood at USD 655/MT, reflecting the bullish sentiment in the market.
Europe
Throughout Q3 2024, the Liquefied Petroleum Gas (LPG) market in Europe experienced a period of significant price increases, with the Netherlands being at the forefront of these changes. Several factors have contributed to this price surge. European LPG supplies were facing a squeeze due to a decline in shipments from the US. More competitive prices were pulling US LPG cargoes eastward, leaving Europe with fewer options. Logistical issues at the US Gulf Coast including Hurricanes further dampen exports. As per EIA, the export of Propane and Propylene has declined from 1827 thousand per barrel to 1641 thousand per barrel during July 2024. While overall domestic demand was subdued due to the summer season, industrial consumption increased, adding pressure on prices during August 2024. Despite the rise in export levels of US LPG, production setbacks, curtailed LPG supply within Europe due to maintenance shutdowns which surged the price trend during September 2024. The upcoming switch to the higher Reid Vapor Pressure winter gasoline blending specification inclined the buying appetite for butane in recent weeks. Insufficient US volume supply combined with unfavorable arbitrage dynamics and higher US terminal costs created an artificial demand during this timeframe.
MEA
In Q3 2024, the Liquefied Petroleum Gas (LPG) market in the Middle East and Africa region experienced a period of increasing prices. Saudi Aramco, the state oil producer, kept its official selling prices (OSPs) for LPG unchanged for July. This stability set the tone for the market and contrasted with Algeria's Sonatrach, which raised prices due to rising demand in the Mediterranean. However, factors such as supply constraints, geopolitical tensions impacting shipping routes, and increased demand from the petrochemical industry contributed to the price hikes in August 2024. Moreover, seasonal demand for propane typically rises during the winter months due to its use for heating which increased prices during September 2024. The price comparison between the first and second half of the quarter showed a 3% increase, highlighting a progressive escalation in prices. As the quarter concluded, the price stood at USD 595/MT of Butane Ex-Works Dhahran in Saudi Arabia, indicating a positive pricing environment characterized by steady growth and robust demand.
South America
Throughout Q3 2024, the Liquefied Petroleum Gas (LPG) market in South America experienced a period of significant price increases, with Brazil being at the forefront of these changes. Several factors have contributed to this price surge. Supply disruptions, particularly due to severe flooding in key regions, have led to critical shortages and subsequent price hikes during July 2024. The closure of major distribution facilities has further exacerbated the situation, pushing prices upwards. Additionally, logistical challenges and reduced distribution capacity have played a significant role in shaping the pricing environment during August 2024. Brazil, in particular, has seen the maximum price changes within the region. The overall trend for LPG prices in Brazil has been on a steady incline, with a percentage change from the previous quarter in 2024 stood at 11%, indicating a continuous upward trajectory. Moreover, the comparison between the first and second half of the quarter revealed a 5% price increase. The quarter-ending price for Butane CFR Santos in Brazil reached USD 671/MT, reflecting a consistently increasing sentiment in the pricing environment.
For the Quarter Ending June 2024
North America
The North American region experienced a mixed price trend for Liquefied Petroleum Gas (LPG) in Q2 2024, where prices witnessed an uptrend in June followed by a significant downtrend as several significant factors influenced market prices during this quarter.
During April 2024, with the official switch to summer gasoline, the pressure on butane prices eased significantly along with the steadily rising LPG inventories. One of the main factors was the high inventory levels of propane and butane, which led to a supply glut in the market. This was due to increased production and a lack of buying interest in the civilian sector, as it was the off-season for LPG demand. Additionally, the ramp-up in production, particularly from propane dehydrogenation (PDH) units, contributed to the surplus of LPG during May 2024.
However, the LPG market in the USA experienced a sharp rebound in June 2024 due to a production disruption amidst the threat of hurricanes like Beryl's forced production cuts, further limiting supply. The anticipation of Hurricane Beryl hitting the Gulf of Mexico created additional anxieties. Market participants feared the storm would disrupt transportation and drive up freight costs, making it even harder to get LPG to market as the quarter-ending price for Butane FD Texas in the USA was USD 7.1/MMBTU.
APAC
In Q2 2024, the APAC region's Liquefied Petroleum Gas (LPG) market experienced a notable decline in prices, driven primarily by an oversupply of LPG and subdued demand from downstream industries. A key factor contributing to this price drop was the increase in production from major exporters, including the Middle East and the United States, which flooded the market with excess supply during April 2024. Additionally, the transition from winter to summer reduced the need for LPG as a heating source, further exacerbating the supply glut. Economic conditions in various countries also played a role, as businesses operated cautiously due to geopolitical uncertainties and declining crude oil prices, which lowered LPG production costs during May 2024. Focusing on China, the country saw the most significant price changes within the APAC region. The overall trend showcased a steady decline in LPG prices throughout the quarter, primarily due to a combination of seasonal factors and changes in industrial demand. Notably, there was a 17% drop in prices compared to the same quarter last year and a 16% decrease from the previous quarter of 2024.
Europe
In Q2 2024, the Liquefied Petroleum Gas (LPG) market in Europe experienced a consistent upward pricing trend. Several key factors influenced this increase. The primary drivers were logistical bottlenecks and unexpected export opportunities, which created supply constraints during June 2024. Additionally, global market dynamics, such as the diversion of large LPG cargoes towards Asia due to robust demand from Chinese propane dehydrogenation plants, tightened regional supplies. A notable decline in crude oil prices during May 2024, a crucial feedstock for LPG production, mitigated production costs, but this was outweighed by the substantial supply pressure. While, seasonality played a role, with the transition from winter to summer resulting in decreased demand for heating. However, disruptions along vital waterways, like the Rhine River, exacerbated the supply tightness during June which offset the low demand and hence resulted in a significant uptrend. Focusing on Germany, which witnessed the most significant price changes, the overall trend displayed a steady increase. The percentage change from the same quarter last year was 6%, reflecting a substantial rise. Concluding the quarter, the price of LPG in Germany stood at USD 1081/MT (Euro/1000 ltr) FD-Hamburg.
MEA
In Q2 2024, the Liquefied Petroleum Gas (LPG) market in the MEA region has experienced a trend of declining prices primarily driven by ample supply and subdued demand. Several pivotal factors have influenced this downward trajectory. The seasonal transition from winter to summer has diminished the demand for LPG, particularly for heating purposes, further contributing to the price decline during May 2024. Additionally, a shift in the blending sector's interest toward other fuels has lowered butane's market value. Furthermore, fluctuations in crude oil prices have impacted production costs, adding to the bearish market sentiment. While Propane prices remained steady in Saudi Arabia, Butane prices witnessed a decline during June 2024 due to an oversupply situation, exacerbated by increased LPG production and exports from the United States, has flooded the market with more butane and propane than needed, causing a price drop during June 2024. Focusing on Saudi Arabia, which has seen the most significant price changes, the overall trend has been decidedly negative. The seasonality effect is evident as the warmer weather reduced heating demand, and petrochemical industries showed less interest in propane. From the previous quarter in 2024, there was a 7% decrease, reflecting a consistent downtrend.
South America
The second quarter of 2024 for Liquefied Petroleum Gas (LPG) in the South American region has been characterized by an environment of escalating prices. Various factors have contributed to this surge in market prices, including limited supply, high demand, geopolitical tensions in major LPG-producing regions, and escalating freight rates. These factors have created a challenging scenario, leading to a steady increase in prices on a monthly basis. Additionally, global trends of declining prices have not impacted the region as significantly as expected, with Brazil, in particular, experiencing the maximum price changes. Brazil, as a key player in the South America LPG market, has seen significant fluctuations in prices throughout the quarter. Floods in Southern Brazil, particularly Rio Grande do Sul, significantly disrupted LPG supply and distribution. Torrential rains in southern Brazil, particularly Rio Grande do Sul, hampered LPG distribution. This key region saw a 7-10% decrease in LPG distribution within May 2024. Copa Energia, a major distributor responsible for 30% of the state's LPG distribution, had to shut down its Canoas city unit due to the rain. According to Alexandre Silveira, minister of mines and energy, the region was severely damaged by torrential rains that began at the end of April, severely disrupting flows, and leaving the LPG market in the southern state working at roughly 90 percent capacity in late May.
For the Quarter Ending March 2024
North America
The first quarter of 2024 has seen bullish fluctuations in Liquefied Petroleum Gas (LPG) prices in the North American region when compared with the previous quarter. Several factors have influenced market prices, including rising crude oil prices, strong demand, declining stock levels, and logistical issues. These factors have had a particularly pronounced impact on LPG prices in the USA.
In the USA, LPG prices experienced a remarkable surge in January. This was primarily driven by declining stock levels and accelerating freight charges. Propane inventories dropped to their lowest level since early to mid-November, leading to a 12th consecutive week of inventory decreases. Additionally, logistical issues, such as temporary closures of the Port of Houston, resulted in delivery backlogs and further exacerbated the price increase. Furthermore, international demand for propane surged, outpacing global supply. Increased consumption in Asia and disruptions in major producing regions put further pressure on US propane prices.
However, During March, the LPG prices slumped in the USA primarily influenced by increasing stock levels and easing freight charges. The US LPG market defied the global trend in March 2024, experiencing a significant price decrease despite Saudi Aramco, the world's largest supplier, maintaining its Official Selling Prices unchanged during this timeframe.
APAC
The Liquefied Petroleum Gas (LPG) market in the APAC region during Q1 2024 has experienced bearish price trend influencing market dynamics when compared with the previous quarter. The prices of LPG in China have seen the maximum price changes during this period. The market initially witnessed an increase in prices driven by rising contract prices and increased demand during the Spring Festival. The logistic issues, including port congestion and shipping restrictions, have also affected the market, leading to temporary slowdowns in supply. The market saw active restocking activities during the Spring Festival, resulting in an uptrend. However, the increasing domestic supply and weakening fundamentals ultimately restricted significant price increases. The market sentiment was also affected by a downward trend in crude oil prices, which negatively impacted LPG pricing. In terms of demand, the LPG market in China experienced moderate to low demand during this quarter. The sluggish downstream market and low entry enthusiasm dampened the demand for LPG. Furthermore, lower enthusiasm from consumer sectors contributed to a loose supply situation during March 2024.
Europe
The Liquefied Petroleum Gas (LPG) market in Europe during Q1 2024 experienced a mixed market sentiment due to global shipping rates and supply chain disruptions. The prices of LPG in Germany, the Netherlands, Italy, and Belgium all increased during early 2024. The increased spending by consumers, coupled with limited supply, created a perfect storm for price hikes. Inflation pushing up other energy sources like gasoline in Europe has also led consumers to turn to LPG as a cheaper option, further increasing demand during January 2024. The supply of LPG remained moderate to low, with the US becoming a major propane supplier to East Asia, Latin America, and Europe. However, the LPG market in Europe including Belgium significantly dropped during February on the back of low demand and low freight charges. Moreover, the LPG market boasts a healthy supply due to weak demand from downstream sectors including petrochemicals which has lessened the pressure on available resources during March which led to a decent decline in the LPG prices.
MEA
The Liquefied Petroleum Gas (LPG) market in the MEA region experienced an overall increasing trend in prices during the first quarter of 2024. Several factors influenced market prices during this period. The ongoing geopolitical tensions, logistic challenges, and supply disruptions in the region played a significant role in driving prices higher. Additionally, the rise in crude oil prices and increased demand from the petrochemical industry contributed to the upward price trend. In Saudi Arabia, the largest player in the LPG market, significant price changes were observed. The prices of LPG in Saudi Arabia increased by 3% compared to the previous quarter in 2024. The first half of the quarter saw a slight increase in prices, followed by a stable price trend in the second half. The quarter-ending price for Butane Ex-Works Dhahran in Saudi Arabia was USD 640/MT, reflecting the stability and positive sentiment in the pricing environment. Overall, the LPG pricing in Saudi Arabia remained stable and consistent throughout March 2024.
South America
In the first quarter of 2024, the Liquefied Petroleum Gas (LPG) market in South America experienced a remarkable uptrend on the back of high domestic demand along with the tight supply from the US market. According to production, inventory, and export data released by the US Energy Information Administration on January 31 stated that the US propane inventories fell for the eleventh straight week, by about 5.3 million barrels. In a petition to the Texas Commission on Environmental Quality, Enterprise Products Partners said that its first 750,000 mt/year propane dehydrogenation unit produced a process flare. This has exacerbated the problem, and LPG prices in the US market have risen, resulting in expensive imports from the USA to Brazil. While inland propane demand was high in March, there were early signs of pre-Easter buying activity, which further limited supplies. Simultaneously, US LPG exports to Brazil fell 12% from the same period last year, potentially reducing Brazil's supply alternatives during March, which resulted in a bullish trend.
For the Quarter Ending December 2023
North America
In the fourth quarter of 2023, the North American Liquefied Petroleum Gas (LPG) market experienced mixed sentiments that influenced prices. LPG prices in October and November witnessed a downtrend while the prices rebounded during December.
This decline was attributed to be subdued from the European nations; however, firm demand was observed from the Asian market. The supply of LPG has been sufficient to meet the market demand as the stockpiles have led the traders to reduce the costs amid fluctuating Crude oil prices. US Mont Belvieu Propane prices have experienced a decline, influenced by the country's oversupply situation, which has been heightened by increased challenges stemming from restrictions in the Panama Canal.
Focusing on the USA, the price of LPG saw an upward trajectory during December with Butane (USD/MMBTU) FD Texas reaching USD 6.4/MT at the end of the quarter. The increasing demand from both the domestic and overseas markets, particularly in Asia, played a significant role in driving up prices. Additionally, the restrictions and challenges faced in the Panama Canal disrupted the usual trading patterns and led to higher shipping costs, further impacting prices during December.
APAC
The current quarter of 2023 (Q4) for Liquefied Petroleum Gas (LPG) in China witnessed steady inclination when compared with the previous quarter. However, October and November witnessed a steady incline while December remained majorly stable.
October 2023 saw an upward trend in the LPG market in China, mainly due to higher imports of LPG prices from Middle Eastern countries as a result of announcements from Saudi Arabia's Aramco and Algeria's Sonatrach to increase the official selling prices (OSPs) for LPG in October by 4–10% over the previous month.
Early in November, the Shandong Propane market witnessed low on-site inventory, facilitating smooth sales. Furthermore, the northern region experienced a surge in civilian demand prompted by the onset of winter, contributing to a steady rise in demand that supported the market. Simultaneously, chemical demand for Propane remained consistent, maintaining a balanced market supply and demand.
However, December saw no change in the price of LPG in China following the announcement by major stakeholders of steady prices for the commodity. The decision by Saudi Aramco to keep its Official Selling Prices (OSPs) for liquefied petroleum gas (LPG) at the same level as the previous month was a rare instance of stability in December to settle at USD 806/MT Propane CIF Shanghai.
Europe
The Liquefied Petroleum Gas (LPG) market in Europe had a challenging quarter in Q4 of 2023, with several factors impacting prices. Firstly, there was a moderate supply of LPG in the domestic market, while downstream sectors experienced a relatively high consumption rate. Additionally, Europe was on the brink of recession, contending with a swift tightening of monetary policy and formidable economic challenges. The primary issue of stagnant or declining real wages throughout the continent has maintained marginally stable prices of LPG during October.
However, November witnessed a marginal surge due to increased demand, coupled with stable supply. Additionally, the decision by Sonatrach and Aramco to increase prices had a significant impact on LPG prices in the region. Furthermore, LPG experienced a surge in civilian demand prompted by the onset of winter, contributing to a steady rise in demand that supported the market.
While US LPG exports to Europe remain steady, a drought in the Panama Canal has thrown a wrench in the delivery pipeline for Asian markets. This has made Europe a more attractive alternative destination for US exporters, potentially leading to increased competition and higher prices for European consumers, including Belgium during December to settle at Butane CFR Antwerp in Belgium for the quarter was USD 599/MT.
MEA
The current quarter of 2023 (Q4) for Liquefied Petroleum Gas (LPG) in the Middle East and Africa (MEA) region was characterized by moderate supply and demand. However, October witnessed a steady incline while December remained majorly stable.
The price hike was attributed to the announcements made by Algeria's Sonatrach and Saudi Arabia's Aramco to raise the official selling prices (OSPs) for LPG in October by 4-10% compared to the previous month. This adjustment was a response to the rising oil prices and a limited global supply of LPG, as reported by market participants. Further, the strong demand from the Asian market abroad has played a significant role in influencing LPG prices.
However, The LPG prices in Saudi Arabia remained steady during December as Saudi Arabia’s Aramco has decided to keep the Official Selling Prices (OSPs) unchanged in December 2023. Meanwhile, Algeria’s Sonatrach has decreased the OSP for Propane by 7% this month. These price adjustments were made due to the decline in demand in the global market. Further, the continuous decline in Crude oil prices has impacted market dynamics to settle at 620 USD/tonne Butane Ex-Works Dhahran, Saudi Arabia in December 2023.
South America
In the fourth quarter of 2023, the Liquefied Petroleum Gas (LPG) market in South America experienced mixed market sentiments that influenced prices in the region. Firstly, the market witnessed a decline in demand from the international market, particularly from the US and European nations, due to economic uncertainties and inflationary pressures during October. This decrease in demand contributed to a bearish market situation.
Furthermore, the market in Brazil, specifically, saw a decline in LPG prices due to the decrease in upstream Crude oil prices and weakening demand. The cost of imported LPG from the US eased, resulting in a price decrease in the domestic market. Overall, the market trend in the region was bearish, with high supply and low demand.
However, during December, Brazilian households and businesses were grappled with a surge in LPG prices, ignited by the US Price Hike. As the world's largest LPG exporter, the US price increase ripples through the global market, directly impacting Brazil's import costs. This surge was fuelled by rising domestic demand and anxieties surrounding geopolitical instability to settle for Butane CFR Santos in Brazil at the end of the quarter at USD 382/MT.
For the Quarter Ending September 2023
North America
Prices of LPG across the North American observed a mixed situation throughout the third quarter of 2023 with prices declining by almost 6% in the first half of the third quarter and then rebounding by almost 7% in the second half. Initially the depreciation of prices was attributed to the low demand as the season remained off. Moreover, depreciation of prices is further attributed to major players such as Aramco and Sonatrach which slashed LNG prices due to low demand. However, prices of LPG rebounded by almost 7% in September as prices of Propane increased due to heightened demand from PDH (Propane Dehydration) from the Asian markets to produce Polypropylene. Furthermore, disruptions in the supply chain system were also observed due to delays and congestion across the Panama Canal which is one of the key trade routes of LPG shipments to the North American market. This consequently led to higher transit charges and increased lead time delivery of the product, therefore further uplifting prices.
APAC
Prices of LPG have shown a mixed trend in the Asian market throughout the third quarter of 2023 with prices initially depreciating by more than 2% in the first half of the third quarter and then appreciating by almost 3%in the latter half. The prime reason for the depreciating prices of LPG in the Asian market was attributed to the inexpensive imports from Russia due trade sanctions placed by United States to ban Russian crude Oil and Natural Gas, due to Moscow’s invasion of Ukraine. This moderate satisfied the demand that arose from the manufacture of Polypropylene which is a major component of plastic. Prices however, rebounded as demand strengthened due to the arrival of Mid-Autumn festive season in September which increased purchasing activities amidst limited production rates as the economy of China rebounded after inflation rates entered negative territory in July. Also increasing prices of the product can be directly linked to increasing prices of upstream Crude Oil which escalated by almost 25% in the third quarter of 2023 which directly affected the prices of LPG. Prices of LNG are expected to increase as OPEC+ countries announce to limit production of Crude Oil to 1 million barrels per day.
South America
Prices of LPG across the South American market have observed a mixed situation throughout the third quarter of 2023. The prime reason attributed to the fluctuation in the prices of LPG are attributed to fluctuating prices of Propane and Butane which declined by almost 6% in the first half of the third quarter of 2023 but rebounded by almost 7% in the latter half. Increasing prices are mostly attributed to increasing prices of Crude Oil which increased by almost 24% in the third quarter of 2023, which consequently led to expensive imports of the product in the South American market. Moreover, disruption in the supply chain system were also recorded as the Panama Canal continued to experience congestions and high transit charges This consequently led to increased transportation costs and increased lead times. The depreciation of the prices in the middle of the third is mostly attributed to the reduction of prices by major LPG producers who decided to decrease quotations as demand remained off season.
Europe
Prices of LPG across the European market have continued to show a mixed trend with the market initially observing a bearish situation with prices declining by almost 0.5% in the first half of the third quarter before rebounding by almost 2% in the second half. The prime reason attributed for depreciation in the prices was mostly attributed to leading LPG producers which decided to lower prices of the product amidst recessionary conditions which prevailed in the European market in the first half of the third quarter. However, during the last month of the third quarter, prices showed a rebound as Sontrach and Aramco increased quotations for official selling prices of LNG. Increasing prices of the product are also attributed to increased industrial activities in the prime industrial areas across Europe such as Botlek, Ludwigshafen and Rotterdam as economic conditions improved. Furthermore, increasing prices of Crude Oil, which appreciated by almost 25% in the third quarter can also be attributed to increasing prices of the product.
MEA
Prices of LPG witnessed a bullish situation in the Middle East market with prices of the product increasing by almost 25% which were in line with the prices of upstream Crude Oil which also increased by almost 25% throughout the third quarter of 2023. The increments in the prices are attributed Aramco’s and Sonatrachs increased quotations for OSP (Official Selling Prices) which were announced as demand for exports to Asian market strengthened as demand from PDH (Propane Dehydration) heightened to produce polypropylene for the plastic industry. Healthy exports were Europe and North America were also observed as economic conditions improved and industrial activities moderately strengthened despite OPEC+ countries announcing to limit production of Crude Oil to 1 million barrels per day. Furthermore, improvements in the existing supply chain system also bolstered the existing bullish situation of the product in the Middle East market. Prices of LNG are further likely to increase as peak winter months near which is likely to increase demand for heating purposes. Furthermore, limited supplies of Crude Oil due to production cuts by Russia and Saudi Arabia is likely maintain a bullish situation throughout 2023.
For the Quarter Ending June 2023
North America
LPG prices have shown fluctuations over the Q2 in this year 2023 in the US market. The LPG prices initially dropped by 24% in April due to a decline in the price of Propane and Butane. The product price declined as sufficient supply was maintained to meet the demand for domestic as well as international markets. Also, the cut in the Propane contract prices by Saudi Aramco has impacted the prices globally. The mid-quarter has seen a rise in prices as the demand from the downstream sectors has surged, while the prices fell by the end of the quarter due to ample availability of the product with a low to moderate demand from European and Asian regions. Further, the Crude oil prices are influencing the prices of LPG in the region as it inclined in April but has slumped over the next two months of the quarter. The LPG price has shown a decline of 18% by the end of the quarter, with a decline of 3% in Crude oil prices in the USA.
APAC
Throughout Q2, the Asia-Pacific region has witnessed a decline in the price of LPG amid the global economic slowdown, and uncertainty in financial markets has depressed demand. Further, the volatility in Crude has been weighing on LPG prices which have impacted the costs in the region. Saudi Aramco cut Propane prices in June. This is on the back of ample supplies in the Middle East and the US and low petrochemicals demand from China, according to reports. The bearish trend in the Saudi propane contract price over the past several months has been driven by ample supplies out of the Middle East and the US and weak petrochemical demand. Chinese propane demand continues to be weak due to the persistent low propylene prices in the region, which are exerting downward pressure on profit margins. Further, Crude oil prices have also declined over the quarter. Oil prices declined in early Asian trade as concerns over global macroeconomic conditions and potential interest rate hikes offset expectations of tighter supplies due to OPEC+ cuts.
Europe
During the second quarter of the year 2023, the LPG prices in the European region declined due to a slowdown in the economy and market uncertainties. The prices of LPG have significantly dropped compared to prices in Asia. This has resulted in fewer incentives for additional volumes beyond contracted amounts to be exported from the US to Europe. The reduced demand in Europe had minimal impact on prices, especially when compared to the robust demand for petrochemical feedstock in Asia. The Russia-Ukraine war disrupted the supply from Russia and impacted the prices in the European nations over this period. The fears of recession have influenced the consumption rates of domestic businesses. Crude oil prices have also shown a downshift in costs amid the global economic slowdown and sufficient availability to meet the demand. The price of LPG declined by 2% by the end of the quarter. The inflation rate in the Euro area, as per Eurostat, has been 7.0% in April, 6.1% in May, and estimated to be 5.5% in June with respect to the same month in the previous year. Although inflation rates are declining, the recession is still affecting the economy and market dynamics.
Middle-East Asia
The Middle East Asia region witnessed a drop in LPG prices in the Q2 of this year, 2023. The major reason that caused the drop in LPG price movement was the adequate availability of the stock coupled with ease in the Crude oil prices. Further, the geopolitical uncertainties have placed pressure on the global demand for LPG from downstream sectors industries in the Middle East countries. The decrease in monthly figures can be explained by a rise in the supply from the Middle East Gulf region during April. This was a result of the conclusion of maintenance activities at Saudi Arabia’s Yanbu and Ruwais ports, along with a decline in seasonal demand from northeast Asia. The drop in the prices of Propane and Butane was reported to be a decline of 23% in the initial quarter, while the prices dropped by 19% by the end of Q2 in Saudi Arabia. The volatility in the price trend for Crude oil has influenced the decreasing price trajectory of the LPG in Middle Eastern countries. The announcements for production cuts of Crude by OPEC+ countries have fluctuated the prices over the period.
For the Quarter Ending March 2023
North America
LPG prices in the American market declined during Q1 2023 as the supply of the product in the market grew to satisfy the needs of regional as well as international markets. The price of the product declined in the international market, which further impacted the product price. Furthermore, during April, the price of upstream Crude Oil declined by around 3.8% and affected the LPG price trend in the USA. However, the demand from overseas declined this month. In line with the international market, the US market experienced a decrease in the prices of Butanol and Propane this quarter. A drop in demand from the international market was observed, while the demand from the domestic market remained stable.
APAC
LPG prices in the Asia-Pacific area have been met with conflicting reactions as China's market saw a significant rise in LPG supply despite low demand, which resulted in a drop in prices. Additionally, the strong dollar's performance put pressure on energy prices, reducing their value. The economic downturn was also indicated by signals of declining global fuel demand, which had a negative impact on LPG prices in the APAC market. In the Chinese market, there was little demand from the chemical industries downstream. Prices decreased in the global market, which had an impact on the cost of imported cargo. Propane CIF Shanghai (China) was valued at USD 821/MT as LPG imports improved in China.
Europe
LPG prices in the German market had witnessed mixed sentiments during Q1 2023 as the supply of the product in the German market grew due to an increase in imports from the Middle East. Moreover, the LPG market in Germany was further affected by a labor strike at the Hamburg port and several protests across various countries in Europe. Liquified Petroleum Gas prices in the German market were assessed at USD 1108/MT during the last of the quarter. The European market had a modest supply of LPG because falling energy prices countered rising upstream crude oil prices caused by the sanctions against Russian imports.
For the Quarter Ending December 2022
North America
During the final quarter of 2022, the US witnessed a decrease in the cost of liquid petroleum gas (LPG) in the US market. America became one of the top exporters of LPG in the world due to the significant rise in domestic LPG supply. The supply hike has eased the demand in the American market. The US home heating demand improved, but it did not have any impact on the declining LPG price trend. The demand from the Asian markets is poor for American LPG cargoes, further contributing to the declining cost in the US.
APAC
Due to the strong supply of upstream crude oil from Russia, LPG prices in India decreased steadily throughout the final quarter of 2022. Due to the low cost of alternative naphtha in Asian countries, which reduced the need for LPG in the Asian markets, industrial crackers in India continued to favor naphtha as a feedstock. The continuous supply of upstream crude oil from Russia helped to drive down LPG costs in China, but the cold weather conditions increased the demand for LPG for heating purposes during mid-Q4. In China, the LPG cost was recorded at around USD 829/MT Propane CIF Shanghai at the end of the fourth quarter of 2022.
Europe
At the conclusion of Q4 2022, the cost of LPG in Germany was estimated to be around USD 1100/MT (LPG). Throughout the fourth quarter of 2022, Europe noticed a rising pricing trend since the heating requirements in the European markets increased. The supply of LPG from the Middle East and Northern African nations during Q4 2022 was limited due to the competing importing Asian markets. The rising inflation rates in various European countries make it difficult to procure LPG cargoes leading to a price rise in European markets. At the end of the final quarter in 2022, the price of LPG in the German market was recorded around USD 1100/MT.
For the Quarter Ending September 2022
North America
The price of Liquified Petroleum Gas (LPG) in the US market kept on declining throughout the third quarter of 2022. The substantial increase in the domestic supply of LPG in the US has reduced the import rates of the US and made America one of the highest exporters of LPG in the global scenario. The demand for home heating and agriculture in the US remained weak, further easing the prices of LPG in the US. Despite the Asian market showing interest in US exports due to its competitive price, it seems to have no effect on the domestic costs of LPG during Q3 of 2022.
APAC
LPG prices in India declined steadily throughout the third quarter of 2022 owing to the strong supply of upstream crude oil from Russia. Industrial crackers in India preferred Naphtha as a feedstock because of the cheap costs of Naphtha in the Asian regions, which brought down the demand for LPG in the Indian market. The prices of LPG in China dropped on the back of a steady supply of upstream crude oil from Russia, but the demanding hike during the quarter end due to the mid-autumn festival boosted the price during September.
Europe
Europe witnessed a declining price trend during the start of the third quarter of 2022. Europe has been able to find a replacement for Russian Gas imports. The Steady supply of LPG from the Middle East and Northern African countries has eased the prices of LPG in Europe during Q3 2022. The Strong inventory levels of competitive energy source LNG also brought down the demand for LNG. The prices of LNG during the end of Q3 2022 increased as the demand for LNG in Asian markets started to rise, indirectly raising the demand for LPG in Europe.
For the Quarter Ending June 2022
North America
In May, the spot price of Brent crude oil averaged $113 a barrel. Due to the high weather conditions, the demand for LPG rose as fuel for cooling equipment. The demand hike in the second quarter forced them to use the LPG saved for the winter, ultimately increasing the price of LPG in the American market. Low oil inventory levels at the moment increase the risk of oil price volatility. The degree to which current sanctions against Russia, potential future penalties, and independent business actions affect Russia's oil output or the sale of Russia's oil on the international market will primarily determine the actual price consequences.
APAC
The price of LPG dropped throughout the second quarter of 2022 in the Chinese market; the domestic demand was poor in April due to various lockdowns and restrictions to curb the resurgence of Covid-19. Despite good local production, China artificially lowered domestic market prices by importing from the Middle East. Post-April, the prices of LPG in China dropped further due to a substantial supply of upstream Crude oil from Iran and Russia. Many countries in the West have banned imports of Russian and Iranian crude, abetting the decreasing price trend in the Asian markets. The price of LPG at the end of Q2 2022 in China and India was USD 1014/MT and INR 97050/MT, respectively.
Europe
During Q2, the LPG price was around EURO 157.874 per barrel in German. The cost of LPG was rising in European markets during April owing to the ongoing war between Russia and Ukraine. Post-April, many European markets witnessed slight ease in LPG prices due to steady supplies from Algeria and Middle Eastern Countries. Saudi Arabia and Algeria, both of these countries, provided discounted oil supply to Europe during MAY, which dropped the price trend of LPG in European markets. The price started to rise again during JUNE due to high inflation rates, and increased fuel demand assisted the rising trend.
For the Quarter Ending December 2021
North America
The US exports of LPG to Asia had been higher overall throughout the second half of FY21 were higher than the exports to Europe by more than a 100%. The export prices of propane assessed on an FOB Texas basis were at a seven year high of around USD 1.5/gallon. Exports to both Asia and Europe increased from the October levels as many Industries in Europe resorted to buying LPG stock from the open market in December owing to sharp increases in natural gas prices. The FOB Texas prices’ discount to CFR Far East Asia narrowed to around USD 160/MT by the end of December. Many refiners in Asia are likely to choose propane over naphtha as the preferred cracker feed for Q1 as crude and natural gas prices will likely rise further during the month of January.
The prices are expected to rise further in Q1 of FY22 as the European market sufficiently tightens with winter demand propelling more LPG imports into the European countries. The US – NWE arbitrage will likely reopen by the first or second week of January as per ChemAnalysts assessment.
Asia
Asian LPG demand revived during Q4 of FY21 after lagging for almost entire period of Q3. As the premium to naphtha started declining since October, the arbitrage for US imports of propane reopened for a short while during the month of October before tapering off due to huge demand from Asia owing to an energy crisis that started somewhere to the tail end of October. Propane’s premium to butane had tapered off by the closing weeks of December as demand for Asian Butane for US gasoline blending industry increased during the winter.
Indian LPG demand had come to a stagnation by the end of Q4 of FY21 as contract prices had reduced by 17% from the October record high of USD 970/MT. Although Propane dehydrogenation capacity ad been increasing every year in Asia, naphtha continued to be the preferred feedstock for the quarter ending December as there was no significant reduction in LPG’s premium to Naphtha. With provincial elections around the corner in Q1 of FY22, LPG demand in India is expected to increase as incumbent governments usually announce subsidies on LPG for domestic use before the elections in a bid to woo the electorate.
Europe
European LPG imports from the US hit half yearly high of 0.42 Mn tons in November of Q4 and the growth in imports only increased substantially by December which is over 240% higher compared to the December FY20 levels. US export prices at the start of Q4 were at record high levels rendering the arbitrage margins impossible for the traders in Europe. The prices however came down by December and are expected to propel the European LPG demand for the first quarter of FY22. The peak winter demand is expected to be less than that of FY21 January. However, the prices of LPG are expected to go up as the demand for LPG as a heating fuel substitute for natural gas owing to a sharp increase in natural gas prices is highly likely.
For the Quarter Ending September 2021
North America
Constant surge in the prices of LPG was witnessed in the North American region during Q3 2021. LPG market outlook showcased an upward trend due to the spike in the feedstock values. In addition, the arrival of Ida hurricane in the Gulf Coat of USA, compelled manufacturers to shut their oil and gas production plants and refineries as a part of contingency plan for almost two weeks that consequently declined the inventory levels of LPG. In addition, sturdy demand was observed from the industrial and household applications throughout the quarter that supported the pricing trend of LPG in the region. It is anticipated that the prices of LPG would further propel in the upcoming quarter following the onset of winter season as the US depends on LPG as their heating fuel.
Asia Pacific
In Q3 2021, an exponential spike in the prices of LPG was witnessed in the Asian markets backed by surging demand by the downstream sectors and volatility in the values of upstream. In addition, rigorous efforts by different countries in the region to curb extreme energy use and to reduce the carbon emission further prompted petrochemical makers using LPG as feedstock to adjust run rates which consequently pushed the demand of LPG. The constraint availability and surging demand for LPG contributed to hike the prices of Liquefied Petroleum Gas. In India, as a major share of the LPG gas is imported positive revision in the prices of LPG by SABIC in the last week of all the three months in this time frame that further fueled its prices in the region. EX-Depot Mumbai prices spiked from USD 630.37/MT to USD 883.72/MT during this timeframe.
Europe
In Europe, the LPG market witnessed a constant uprise in the pricing trend during the third quarter of 2021. Increment in the values of LPG was backed by constraint supplies due to lower imports from the USA and other regions. Moreover, other factors like high freight charges, shortages of containers and the crisis of natural gas also contribute to the inflation in the prices of LPG in the region. Additionally, the values of LPG will be pushed further in the upcoming months as the demand surges in the winters across the region.
For the Quarter Ending June 2021
North America
The North American LPG market continued to rally upwards throughout the second quarter after observing a marginal downfall during the first half. Continuous strengthening of the brent Crude Oil maintained kept the offers considerably raised. Brent Crude oil prices were averaged at USD 73 per barrel in June with an increment of USD 5 per barrel from the prices in May. Demand was consistent from the household applications, whereas recovered industrial infrastructure in the US Gulf region surged the offtakes for the industrial purposes. Prices in the US market consistently improved throughout the quarter with quarterly average of LPG prices assessing at USD 221 per tonne, showing an increment of USD 16 per tonne in the second quarter of 2021.
Asia Pacific
As the winter season ended in the Asia pacific region, LPG demand slowed comparatively to the previous quarter due to lesser heating demand with the arrival of the summer season. However, increasing focus over the industrial, household applications and for the electricity generation (specially in Japan) backed by recovering trade dynamics supported the material availability. Softening North Asian heating demand ahead of summer and healthy supply to Asia from the US and Middle East in June. Saudi Aramco’s contractual prices of Propane and Butane in June were assessed around the range of USD 500-515 per tonne and USD 495-510 per tonne, with an increment of USD 20-35 per tonne from the prices in May.
Europe
The European LPG was mainly concentrated across the domestic consumers amid rising demand from the industrial applications and household uses along with the electricity generation applications. The market noted a sharp economic rebound after the vaccine roll-out spread optimism which further supported the overall LPG consumption. Supplies were ample as the distribution was balanced from the Middle East after a marked delays in the Asian cargoes. LPG prices in Germany were averaged at USD 210.6 per tonne in the second quarter of 2021, with the overall pricing showing a slight decline during quarter.
For the Quarter Ending March 2021
North America
Due to severe freezing weather in the US Gulf region, LPG supplies were limited in the first half of the quarter. The Gulf freeze catastrophe in the United States heightened the supply related constraints as demand for heating purposes surged and many major production facilities in the region experienced manufacturing disruptions due to the cold weather. The price of Liquefied Petroleum Gas (LPG) in the North American region rose dramatically because of increased demand and sluggish supply, even though the average quarterly price of LPG stood around USD 1665/ton.
Asia-Pacific (APAC)
LPG supplies in the Asia Pacific region were balanced throughout the first quarter of 2021, owning to the start of a new olefin facilities in China in which 77% of the demand is driven by LPG, followed by the PDH (propane - dehydrogenation) plants in China operating at maximum efficiency. However, temporary operational halts due to the Chinese New Year holidays and production cuts by the OPEC nations showcased some tightness in the supplies. The demand spiked as the winter season hit the northeast Asian region. A leading supplier to the South-eastern region, Saudi Aramco revised its March prices of LPG ratio (50% Propane – 50% Butane) to USD 610/ton and (70% Propane – 30% Butane) to USD 616/ton, registering an increment of +USD 70/MT and +USD 48/MT, from the January settlements.
Europe
LPG supplies in the region remained constrained, as imports from the US declined due to inclined domestic demand of the US gulf region. Demand for heating applications rose supported by extreme weather conditions which hit the Northwest European region during the quarter. A major supplier from the Middle East announced a multi-fold increment in the prices of LPG with the offers surging further by increased transportation charges.
For the Quarter Ending September 2020
Asia
The Asian LPG demand became resilient in the quarter ending September 2020 as the industrial offtakes improved with plants operating at their full capacities to recover the slumped margins due to pandemic. As majority of Southeast Asian countries cater to their LPG demand through imports, stagnated imports due to Hurricane Laura in the U.S. shrouded the regional buying activities. LPG is anticipated to partially tumble in the coming months with China eyeing to shift the household consumption to piped natural gas. However, several traders are likely to stockpile LPG ahead of the winter season under fears of supply shortage that can interfere with consumer sentiments.
Europe
Outlook for LPG considerably improved in August with its increased preference over Naphtha as an industrial feedstock due to the sudden rebound in the Naphtha values. However, with Propane-Naphtha spread decreasing by the end of September, total imports of Northwest Europe showcased a prominent drop by over 10 per cent as compared to August. The fall in offtakes of LPG as a petrochemical feedstock was primarily due to its high prices causing manufacturers switch to other alternative to protect their margins. Furthermore, resurgence in coronavirus in early September has raised serious concerns over the prevailing demand uncertainties in the next quarter.
Middle East
As many Middle Eastern countries buoyed on increasing the supply of LPG for power generation systems amidst the aggravating heat of August, several companies including ADNOC considerably increased the production output with no substantial increment in the trade flows. The company deviating from its usual service allowed advanced stock purchasing on increased demand from importers. ADNOC agreed to the nominations granting advanced local dates for consecutive two months starting October. Traders perceive this as a smart move that would set the middle east fuel market at optimum and organized inventory levels.
