LPG: Nov 8-12: Prices gain on tight supply/demand and rising crude
CFR Far East
The CFR Far East market strengthened last week along with firm crude prices and tight supply/demand for December delivery. Rim Asia Index for propane and butane was at $891.25 per metric ton (/mt) and $876.25/mt respectively as of Nov 11, up $17.25/mt from Nov 5. Vessel congestions at the Panama Canal were worsening and the waiting time increased to 14-18 days on a south-bound route. Thus, sellers with cargoes on hand apparently hesitated to enter discussions. Further, some sellers focused on supplying cargoes to Europe where prices were firm. On the other hand, buying interest from traders was robust in the second-half December delivery market. One 23,000mt propane cargo for second-half December delivery was traded between traders at $890/mt (equivalent to a premium of $24/mt to the December CP) last Thursday.
FOB Middle East
The December CP was expected at around $855/mt for propane and around $840/mt for butane. For December loading, Middle East gas producers had room to sell spot cargoes. QPSPP issued a sell tender for a 45,000mt propane cargo for second-half December loading. With propane supply from the US seen to be tight in the CFR Far East market, some buyers were reportedly considering taking part in the tender. Some sources, however, pointed out that the awarded price might be only at a discount of $8-12/mt to the December CP since freight costs were rising and bearish sentiments were heightening that the January CP might be significantly lower than the December CP. On the other hand, Saudi Aramco could sell a pure butane cargo due to high inventories for butane. In addition, Aramco requested its customers that would receive term cargoes in December to increase the butane quantity instead of propane, according to sources.
Asia Pressurized Market
For the FOB South China market, one importer from South China offered first-half December loading at a premium in the mid $30's/mt or above to the December CP. In Vietnam, one refinery had carried out a sell for two cargoes of 1,500-1,700mt for Nov 18-20 and Nov 22-24 delivery but results were unknown.