Prices of both imported and domestically-produced LPG fell another 9-12% in China this week after sliding 10-13% last week amid lower Asian LPG values and weaker demand from the petrochemical sector, trade sources said Friday, December 12.
The price of propane for delivery into South China 30-45 days forward, or in H1 January, was assessed at $465/mt Thursday, down $64/mt or 12% from $529/mt a week earlier, and for butane assessed at $493/mt, down $56/mt or 10% from $549/mt.
The fall in Asian LPG prices was in line with the slump in global crude prices, and also weighed on China's domestic LPG prices, trade sources said.
"The import cost for H1 January delivery cargoes is estimated to be around Yuan 3,400/mt ($555.27/mt) on a CFR China basis after adding taxes and fees, which would be much lower than the current traded level," a trade source in South China said.
"This has encouraged LPG sellers, including domestic refineries and LPG import terminals, to cut their prices in a bid to sell as much as they can before the arrival of lower-cost imported cargoes," the source added.
In addition, weaker demand from petrochemical plants has also driven up stock levels at some refineries in East China, forcing them to slash prices of domestically produced LPG to ease stock pressure, trade sources in East China said.
"Sinopec Jinling refinery was said have stock pressure due to poor sales of feedstock LPG," a local trade source said, adding the refinery and neighboring Sinopec Yangzi refinery had cut prices for domestically produced LPG by Yuan 550-600/mt this week to around Yuan 3,645-3,650/mt.
Another local source said: "Sinopec Zhenhai refinery was said have adjusted its yield of LPG product, increasing the production of residential-use LPG and decreasing the production of feedstock LPG amid shrinking demand from petrochemical plants."
Many petrochemical plants were said have suspended operations or lowered run rates due to the slump in oil product prices, which was in line with lower global crude prices, local trade sources said.
Petrochemical plants use feedstock LPG to produce MTBE and alkylate, which are blended to produce gasoline.
Prices of domestically produced LPG were said have been traded at around Yuan 3,650-3,750/mt in East China Friday, down Yuan 525/mt or 12% from Yuan 4,175-4,275/mt the week before.
Imported LPG with a propane and butane ratio of 50:50 was said to have traded at around Yuan 3,950-4,050/mt in East China Friday, down Yuan 500/mt or 11% from Yuan 4,450-4,550/mt last week.
COSTS FOR LATER ARRIVALS SEEN TO FALL
Meanwhile, prices of both imported and domestically-produced LPG also fell in South China this week amid the bearish market outlook, despite fewer imports this week, local trade sources said Friday.
LPG import terminals Guangzhou Huakai and Zhuhai New Ocean in southern Guangdong province were said have received two refrigerated cargoes totaling around 32,000 mt of LPG this week, down from 62,000 mt seen the week before, according to data from Beijing-based energy information provider JYD Commodities Hub.
Sinopec's Guangzhou, Maoming, Zhanjiang refineries and CNOOC's LNG plant and LPG terminal were said to have cut spot prices for domestically produced LPG by Yuan 350-520/mt this week in a bid to boost buying.
"Sinopec Guangzhou's LPG stock level was said to have not been very high, but it also cut LPG prices to complete with imported LPG this week," a local trader said.
However, the lowered prices did not attract much buying interest as buyers were expecting prices to fall further in the near future, traders said.
"We will continue to buy [limited volumes that we need] and keep inventory at a low level in the near future as spot prices are likely to fall further," a trader with a third-tier LPG distributor said.
Domestically produced LPG was said have been traded at around Yuan 3,925-4,025/mt in South China Friday, down Yuan 425/mt or 10% from Yuan 4,350-4,450/mt last week.
Imported LPG was said to have been traded at around Yuan 4,050-4,100/mt, down Yuan 425/mt or 9% from Yuan 4,450-4,550/mt the week before.
