China LPG prices continue to edge lower on seasonal demand lull
Source: www.chinamining.org Citation: Platts Date: August 17, 2015
Imported and domestically produced LPG prices continued to edge lower across southern and eastern China this week amid bearish market outlook and the seasonal lull in demand, local trade sources said Friday.
Import cost for cargoes arriving in the first half of September was estimated below Yuan 3,000/mt ($468.68/mt) CFR China, based on recent Asian refrigerated LPG values, which was lower than the current spot prices in the domestic market, according to traders.
This is believed to have dampened buying interest and exerted downward pressure on spot prices this week, trade sources noted.
In China`s southern Guangdong province, imported LPG cargoes of mixed propane and butane were said to have traded at around Yuan 3,350-Yuan 3,400/mt in the wholesale market this week, down slightly by Yuan 50/mt from Yuan 3,400-Yuan 3,450/mt in the previous week.
"We are not optimistic about the price in the near future ... import cost for later arrivals have dropped to around Yuan 3,000/mt or even lower," a trader said.
"Besides, LPG supply is ample amid weak seasonal demand, which has discouraged buying interest as well," he noted.
Four refrigerated cargoes, totaling around 110,000 mt, were reported to have arrived in Guangdong province this week, up slightly from around 103,000 mt seen in the previous week, according to updated shipping data from Beijing-based energy information provider JYD Commodities Hub.
Domestically produced LPG was said to have traded at Yuan 3,300-Yuan 3,400/mt in the region this week, also down by around Yuan 50/mt from last week.
Trading activities remain thin as many buyers continued to maintain relatively low inventory levels amid a bearish market outlook, traders added.
In eastern China, both imported and domestically produced LPG was said to have traded at around Yuan 3,550-Yuan 3,650/mt and Yuan 3,500-Yuan 3,600/mt, respectively, in the region this week, down by about Yuan 50/mt from a week ago as well.
Bearish market outlook and weak demand were also cited as main reasons behind the fall in spot LPG prices in the region this week, according to traders.
Demand for feedstock LPG from petrochemical plants was said to have faded further this week due to lower crude prices, which also exerted downward pressure on residential-use LPG prices, local traders said.
Feedstock LPG was heard to have traded at around Yuan 3,650-3,750/mt in East China this week, down by around Yuan 100/mt from last week.
Petrochemical plants in China typically use domestically produced LPG as feedstock to produce MTBE and alkylate, which are blended to produce gasoline.
Feedstock LPG contains more alkenes than residential use LPG.
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