China has taken delivery of around 88,000 mt of Iranian LPG in June after a break of four months, as the Islamic republic extends exports to North Asia in its attempts to circumvent sanctions aimed at preventing it from exporting oil products, market sources said this week.
The VLGC, Gas Jasmine, discharged its cargo comprising 33,000 mt of propane and 11,000 mt butane at the Chinese port of Daxie, in Ningbo, on June 21 after a voyage from Khor Fakkan in the UAE, according to Platts ship tracking tool cFlow.
This followed a ship-to-ship transfer of the cargo in the Persian Gulf, trade and shipping sources said. The ship is currently heading to Fujairah in the Persian Gulf in an unladen state.
"We heard it's sold by PCC via a Middle Eastern company, hence it can only be taken by China and not South Korea," a market source said, referring to Iran's Petrochemical Commercial Co.
The Chinese petrochemical producer that was said to be the buyer could not be immediately reached for comment.
Another vessel, the Schumi, was heard to have delivered an Iranian LPG cargo in early June to an Asian trading firm at the southeastern China port of Shantou, after loading at Bandar Imam Khomeini port in late April, market sources said.
This vessel is also back in the Persian Gulf in an unladen state, according to cFlow. The company which was heard to be the buyer denied it has taken the cargo, which was heard to also comprise 33,000 mt of propane and 11,000 mt butane.
PCC, Iran's top exporter of petrochemical products, last month sold via a spot tender a CFR cargo comprising 33,000 mt of refrigerated propane and 11,000 butane to South Korea's E1 Corp. for May 15-25 loading. Some traders said E1 might have taken two spot cargoes from PCC.
South Korean traders, as well as others in Asia, had largely stopped importing Iranian LPG last October, after the EU sanctions on natural gas exports from Iran were included under tightened trade curbs.
But in January, China imported 10,450 mt of butane from Iran and no propane, data from the country's General Administration of Customs showed. China did not import any LPG from Iran after that until the June shipments.
In contrast, China's overall imports of propane were 588,073 mt and butane were 455,069 mt from January to May this year.
For the whole of 2012, China shipped in 104,319 mt of propane from Iran, versus 1.88 million mt of overall imports, and 62,665 mt of Iranian butane, compared with 1.44 million mt of total imports.
In 2011, China imported 487,327 mt of Iranian propane, against the total of 2.03 million mt. It imported 214,495 mt of butane from Iran, versus a total of 1.37 million mt, according to the customs data.
Market sources said Iran could have delivered LPG into China on a more regular basis had Iranian tanker companies also owned VLGCs, as it has in the case of VLCCs for facilitating the transportation of crude oil.
A check of Iranian VLCCs on cFlow shows the bulk of Iranian shipping company NITC-controlled oil tankers performing the Kharg Island to China shuttle service.
Various market sources have told Platts that Iranian-linked shipping entities are scouting to buy second-hand VLGCs for delivering its LPG cargoes on a CFR basis since the second quarter of this year.
MORE LPG TONS FROM THE MIDDLE EAST EXPECTED IN JULY
The re-emergence of LPG from Iran last month, along with arbitrage supplies from the US and West Africa, has helped to fill in the supply shortfall last month from other Middle Eastern producers, such as Saudi Aramco and Qatar's Tasweeq, market sources said.
But Middle East FOB supplies -- which were down 7% in first-half 2013 versus the same period last year -- have improved this month, with more expected to come in July during the Ramadan fasting month, in time to meet an expected gradual recovery in demand in Asia, traders said.
On Wednesday, prices of propane and butane cargoes for delivery along the key Singapore-Japan route were assessed at $870/mt and $860/mt, respectively, up from last Friday's $852/mt for propane, which was the lowest since June 6, and $842/mt for butane, the lowest since June 3.
Before the sanctions, PCC had exported via tenders or private discussions, up to to 380,000 mt a month in seven to eight mixed refrigerated LPG cargoes from the loading ports of Bandar Imam Khomeini or Assaluyeh.
Propane and butane had been included in an annex to the EU Council Regulation of December 21, 2012, concerning restrictive measures against Iran.
Since the EU sanctions that first came into effect last July has banned the provision of insurance for oil tankers by EU-based insurance and re-insurance companies for moving Iranian oil cargoes, Tehran has been using its own vessels or time-chartered ships to export crude and fuel oil.
Last month, a Chinese-owned VLCC with European insurance cover called at Iran's Kharg Island crude loading port to lift oil for the second time in the last three months, market sources had said.
