A weak crude complex which has seen futures values drop to multi-year lows is only adding to an already depressed Amsterdam-Rotterdam-Antwerp spot propane market, where demand has failed to benefit from any increase in end-user heating consumption.
Ample regional stocks, expectations of lingering mild winter temperatures and high winter contract obligations have all dampened the traditional trend which would usually see strong distributor demand pull significant spot volumes inland from ARA storage terminals and refineries alike.
The latest Heating Degree Days Report from BNP Paribas released Monday projected a significant 43% deviation into milder-than-normal temperatures for the next two weeks until December 28, following the 28% milder temperatures seen in the two weeks since November 30.
The report showed that the heating season from September 1 to date had deviated 17% into milder-than-normal temperatures compared with last year and the 10-year norm.
Spot prices are therefore not only being driven lower by underlying bearish pressure from crude but also by weak supply and demand fundamentals.
FOB ARA pressurized barges and FCA truck and rail cars were both assessed $9/mt lower Monday at $364/mt.
"Demand -- it is so low," a source said. "When there is some then everyone will jump on it with their contract tonnes. People are selling with minus compared with spot prices for just one or two 20-tonne trucks a day.
"Brent is falling every day and demand is not coming in," the source said. "I do not see it picking up" in the short term.
This lack of throughput is also beginning to cause a back-up of product within the ARA, according to some sources, putting further pressure on spot prices from the supply side.
"There is a lot of product around and it makes huge losses [if sold spot]," a source said. "With a lot of product around the last thing you want to be doing is selling."
There has been little optimism among sources for any short-term improvement in spot demand for propane, given current stock levels and continued offtake of contract tonnes.
