Aramco’s Juaymah Outage Lifts Asian LPG Prices as Buyers Seek Alternatives

A structural collapse at Saudi Aramco’s Juaymah NGL facility at Ras Tanura on Monday has driven Asian LPG prices sharply higher, with importers seeking alternative cargoes after March loadings were cancelled.

Following the incident, the CFR Japan price closed at a 10-month high of $622 per metric ton on Thursday, up $33/mt from the previous day. Cash differentials for Middle East evenly split cargoes also strengthened. It was previously assessed at a mid-$10s/mt discount to the March contract price, but brokers indicated values have flipped to a low single-digit premium to the CP.

Sources attributed the rally to anticipated supply tightness in the region after the cancellation of Saudi cargoes.

“The outage has introduced a risk premium to prices. There is still no further clarification from Aramco on how long the disruption will last. Many expect it could extend for at least a month, which has heightened supply concerns and lifted prices,” a trader said.

Buying interest also increased as importers sought U.S.-origin cargoes to replace disrupted volumes, further supporting prices. Shipbrokers said the LPG vessel Gas Aries, which was initially expected to load a March cargo in the Middle East, has changed course and is now heading to the U.S. for April loading.

One shipbroker said some of Aramco’s term customers have withdrawn upcoming loadings, including an Indian buyer.

“Another alternative is sourcing from other Middle Eastern suppliers to fill the supply gap. Buyers do not necessarily have to turn to U.S.-origin cargoes, as the voyage is longer and freight is more expensive. The same Indian term buyer that withdrew was heard seeking supply from Ras Laffan,” the shipbroker added.

Analysts noted that the rise in Asian prices has widened the U.S.-Asia arbitrage. “The outage has given U.S. suppliers an opportunity to supply Aramco’s term customers. It is beneficial as the U.S. has ample supply,” one analyst said.

The price spread between the CFR Japan propane average flat price and the OPIS Japan Mont Belvieu Delivered price, which reflects the delivered cost of U.S.-origin propane into Asia, closed at $66.57/mt on Thursday, widening from $56.19/mt a week earlier.

—Reporting by Cheryl Lee, clee@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com