Spot LPG prices in South and East China were under pressure this week, amid expectations of import costs for March-arrival cargoes falling with Saudi Aramco setting Contract Prices lower, local traders said Friday.
Imported LPG with a propane-butane ratio of 80:20 or 70:30, traded around Yuan 6,550-6,650/mt in South China's Pearl River Delta region Thursday, down Yuan 100/mt from around Yuan 6,650-6,750/mt seen the week before, local traders said.
The same grade of imported LPG was traded around Yuan 6,500-6,550/mt in East China's Yangtze River Delta Thursday, also down by around Yuan 50/mt from Yuan 6,550-6,600/mt last week, traders said.
Meanwhile, the March-arrival LPG cargoes are estimated to cost around Yuan 6,250-6,300/mt on a CFR China basis -- much lower than current spot LPG prices, an LPG trader in the Pearl River Delta said.
The lower import costs for March-arrival was largely due to Saudi Aramco setting its March Contract Prices for propane and butane at levels lower than market expectations, the trader added.
On February 27, Aramco set its March CP for propane at $855/mt, down $115/mt from its February CP, and for butane at $870/mt, down $100/mt month on month -- both below market expectations.
This is the third consecutive month CPs have been set lower month on month, Platts reported earlier.
"Both Asian and domestic LPG prices started sliding after the announcement of the March CPs, on concern over lower-priced March arrivals," the Pearl River Delta LPG trader said.
DOMESTIC GRADE ALSO TRADES LOWER
Lower imported LPG prices also dragged down prices of domestically produced LPG in South and East China, said local traders.
Domestically produced LPG truck cargoes traded at around Yuan 6,550/mt in the Pearl River Delta spot market this week, down Yuan 100-200/mt from around Yuan 6,650-6,750/mt seen last week, said a local trader.
"Sinopec Guangzhou cut its offer price by Yuan 200/mt to Yuan 6,550/mt this week in line with lower imported LPG prices," the trader noted.
"The price of imported LPG is normally higher than that of domestic-grade LPG due better quality of the former, but now their prices are almost the same," the trader added.
In the Yangtze River Delta, spot price of domestically produced LPG truck cargoes was around Yuan 6,400/mt, also down Yuan 100-200/mt from around Yuan 6,500-6,600/mt seen last week, said a local trader.
"Imported LPG cargoes were sold around Yuan 6,500/mt or even lower, which exerted downward pressure on domestic-grade LPG prices," the trader noted.
