According to NGLStrategy, the LPG market has returned to a market of potential opportunity after a transition period. Increased production from major exporting countries such as the US and the Middle East, has resulted in more seaborne trade in 2018 than preceding years. Furthermore, demand has remained strong within the retail space particularly in the East, with petrochemical demand increasing from 2017 with healthier economics for utilising LPG over other feeds. This has resulted in more favourable arbitrage economics since the second quarter of the year.

The particular return of petrochemical buyers to the LPG market in 2018 has re-emphasised both propane and butane’s importance within the ethylene production pool and it is expected that it will continue to play an increasing role going forward.

The widening arbitrage economics from the US major consuming regions, are present even with an increase in freight rates. In 2018, the Baltic benchmark starting to see a positive outlook from the lows of 2017 when rates sunk to levels sub $20/t. Despite the upturn, times remain challenging for shipowners, and it remains to be seen how fast the market can recover and return to investment grade rates.

In reality, 2018 is a story of two halves in that in the latter part of the year it is expected that there will be increased supply of LPG as a few major projects come to realisation. New exports of LPG are expected from the LNG projects commencing in Australia as well as the long-awaited increase of seaborne exports from the Marcus Hook terminal on the US East Coast when the Mariner East 2 pipeline begins operation. Who will be the major consumers of such additional seaborne volumes and how much volumes can the petrochemical industry absorb, will be a key focus for many LPG players to determine what the major price sensitivity of propane and butane is in today’s market.

CMT’s 13th LPGtrade Summit, the meeting platform for all commercials stakeholders in global LPG trade, is a NOT TO BE MISSED event for all who are involved in the LPG production, marketing, procurement, trading, shipping and etc. 

Register NOW to attend with your team, to enjoy attractive early bird group discounts.  Contact huiyan@cmtsp.com.sg today!

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