Asian LPG demand up but profit down
Asian LPG demand up but profit down
SINGAPORE (Reuter): Liquefied petroleum gas (LPG) prices are
expected to recover ahead of peak fourth quarter demand in Asia,
traders said.
But they said they were not bullish about winter profits in
China, despite projections of a large rise in imports.
Profit margins have dropped tremendously from last year as
more players cash in on the Chinese LPG market, they added.
China imported 170,000 tons of LPG in June and close to
160,000 tons in July. The country imported a total of 1.1 million
tons between January and July. Imports in the fourth quarter are
expected to rise 30 to 40 percent from the summer.
However, August premiums over the Contract Price (CP) have
been halved to US$55-60 per ton from last year's US$120-130. CP
refers to the Saudi contract price, the industry benchmark.
September premiums have recovered slightly from August, with
imports into South China discussed around CP plus $60-65 C and F.
Indicated prices in Nantong and Shanghai are similar.
Typhoon Kent, which swept the South China coast last week,
disrupted discharging schedules of LPG vessels, traders said.
"But there were no major hiccups, just a couple of days of
delay," said one Chinese supplier.
In the spot market, the Petroleum Authority of Thailand has
sold about 2,000 tons of pressurized LPG to a Singapore-based
trading company that had just started to trade LPG, an industry
source said.
The deal was concluded at CP plus $7 FOB Sri Racha. PTT
intends to export another 4,000-5,000 tons in September. The
company will not tender for the sale but will negotiate directly
with interested buyers. Indonesia has floated a tender on Tuesday
for the sale of between 120,000 tons and 135,000 tons a year of
pressurized LPG FOB Santam, Indonesia.
Term discussions between Malaysia and Japan for up to 480,000
tons of LPG are in the final round. Four firms have already
finalized agreements and term deliveries are to begin next month.
Only two Japanese firms, Idemitsu and Nippon Petroleum Gas
Company (NPGC) have yet to conclude a deal.
Easing
In Singapore, September premiums have eased by around $20 to
$5-10 over CP, C and F Singapore, said a Japanese trader here. In
the middle east, an Abu Dhabi Gas tender to sell up to 450,000
tons of refrigerated LPG from October 1995 to November 1996 was
awarded to Geogas at a premium of 50 cents to 90 cents over CP,
FOB Das Island, sources said.
Iran's closed tender to sell up to 40,000 tons of refrigerated
LPG was awarded to Japanese trading house Tomen Corp, traders
said.
The cargo, for loading on October 2-5, was heard to have been
sold at $134 for propane and at $140 for butane FOB Iran.
The sources said Tomen had no import license into Japan and
may have concluded the purchase of the contract on behalf of a
major oil company.
But the major said to be involved denied the market talk and
Tomen declined to comment.
The September Saudi CP was unchanged from August CP. Propane
is pegged at $147 FOB Ras Tanura and butane at $155. Most traders
expect the October CP to increase.