Far East Propane Premium Nears $90 On Winter Demand Expectations
Asia’s CFR Japan propane premium for a 23,000 metric ton cargo arriving in the first half of December rose to $89/mt over the December Far East propane swap on Tuesday, according to OPIS’s assessment. This is nearly double the $47.50/mt on Oct. 22, when H1 December cargoes began attracting greater buy-side liquidity in the physical market.
The rise in premiums comes amid continued supply concerns following force majeure declarations by Energy Transfer and Phillips 66 at their Nederland and Freeport terminals, respectively, Dow Jones Energy reported last week. Market participants have expressed concerns over further tightening in Asia, particularly in butane supply, should the disruptions persist.
However, LPG loadings from the two U.S. terminals showed no significant slowdown last week, according to Vortexa data. Exports from Nederland reached 291,500 mt over the past seven days, in line with average weekly volumes recorded this month. Freeport exports totaled 166,200 mt over the same period, up from around 140,000 mt at the start of the month.
Amid concerns about Middle Eastern supply availability, QatarEnergy and Kuwait Petroleum Corp. have issued two sell tenders so far this week, compared with five in October and six in September, according to OPIS data. The Strait of Hormuz remains tense despite renewed optimism surrounding the possibility of a U.S.-Iran deal, leaving uncertainty over regional supply availability.
Despite the more optimistic near-term supply outlook, Far East LPG premiums have remained supported by expectations of seasonally higher winter demand in North Asia, an analyst source said.
Data from the Japan LP Gas Association showed residential-commercial heating demand averaging around 950,000 mt/month from November through March, compared with a monthly average of 610,000 mt from June through August.
Japan’s LPG imports rose 46.2% month on month to 855,300 mt in October, according to Vortexa data, as buyers began building stocks ahead of peak seasonal demand in December and January. October imports were 27.4% higher than the average monthly volume recorded in the third quarter of this year, the same data shows.
–Reporting by Chek Hoe Tan, chek.hoe.tan@dowjones.com; Editing by Mei-Hwen Wong, mei-hwen.wong@dowjones.com