Middle East LPG trade picks up on soft prices, freight rates


Middle Eastern producers sold this week two LPG cargoes to Western traders for February loadings, as trading activity perked up amid recent low Asian prices and shipping rates, market sources said Thursday.

One European trader was heard to have bought a 44,000 mt evenly split parcel from Qatar’s Tasweeq via direct negotiations for second-half February loading, trade and shipping sources said. The other 44,000 mt evenly split cargo was heard sold by Saudi Aramco, also via direct negotiations to a Western trader, for February 10-12 loading, sources said.

They said the two FOB trades might have been concluded at slight premiums to the Saudi Aramco March Contract Prices, though this could not be confirmed.

This was an improvement from single-digit discounts seen in the FOB market in recent weeks, and also reflected the recovery in the market Thursday. Tasweeq was also heard to have sold a cargo via tender last month for H2 February-loading to a Western trader.

UAE’s Abu Dhabi Gas Liquefaction Co. Ltd., or Adgas, mid-last month sold via tender a cargo comprising 33,000 mt of propane and 11,000 mt butane for February 17-19 loading, at a slight discount to the Saudi March CPs for propane and butane, FOB, to a North Asian trader, sources said previously.

Traders said Wednesday that Turkish trading firm Bayegan has a mixed third-party LPG cargo to offer for March 15-16 loading from Ruwais.

This followed Bayegan’s sales of two 44,000 mt evenly split cargoes for February loading over the past month. The buyers and prices were not confirmed but some traders said one of the buyers could be an oil major and the FOB Ruwais cargo could be headed to Japan.

Other sources said a vessel has been fixed earlier this week to lift a mid-February cargo. Traders said Bayegan might have earlier sold two January-loading cargoes and also for early December loading in recent months.


However, earlier talk that Saudi Aramco might have sold late last month two February loading cargoes ahead of the announcement of its February term contract prices have been denied by the company. Sources said there had been some interest on Monday in Aramco’s spot cargo for February loading.

The latest Middle Eastern trades come as the front-month CP propane swaps languished at more than a decade-low in recent months on weak crude futures and ample regional supplies. The March CP propane swap was assessed at $271/mt Wednesday, but rebounded strongly Thursday to $295/mt on stronger crude futures and as more bidders emerged in the physical market this week.

Over Wednesday and Thursday, European major BP had bought two 23,000 mt CFR propane cargoes for H1 March deliveries from Shell and Glencore, traders said.

Platts assessed the CFR Japan propane cargoes for first-half March delivery at $342/mt Thursday, up $28/mt from $314/mt Wednesday, which was the lowest in over a week, while butane was assessed at $377/mt, up $33/mt day on day.

CFR Japan propane premiums had hovered in the range of just under $40 to slightly above $50/mt over the past month.

Trade activity was also stirred by the recent slide in VLGC rates on the Persian Gulf-Japan route, which on Thursday was assessed at $46.50/mt, the lowest since March 10, 2014, when it was just above $46/mt.

Costly freight, which lagged CFR premiums, had stymied FOB Middle East trade over the past year, when rates hit a high of $136/mt around mid-July and held above $100/mt until August 18, Platts data show.

Shipping sources said India’s Reliance Industries had also taken a vessel at the high $40s/mt, which is equivalent to the Persian Gulf-Chiba lump sum $765,000. Some shipping sources said the recent FOB trade activity could set a floor to the freight downtrend at the low-to-mid $40s/mt.

Meanwhile, India’s state-run BPCL is negotiating for two vessels owned by Exmar and Varun Shipping for loading term cargoes at Ras Tanura for a February 20 date, and the owners are holding off for higher rates, sources said.

State-run HPCL is also seeking a VLGC to carry a 45,000 mt Qatari cargo ex-Ras Laffan over February 20-21 to the Indian east or west coast. The bid closes February 5, shipping sources said.

Source: Platts



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