Saudi Arabia's state-owned Saudi Aramco has cut its September propane Contract Price (CP) and kept the butane CP at a similar level as last month.
The September propane and butane CP are at $350/t and $360/t respectively. The latest propane CP has been cut by $20/t from August, while the butane CP remained at $360/t.
Aramco set its latest discount for term customers loading from Yanbu at $10.50/t, $2.50/t firmer than the previous month's $13/t. This is because today's freight rate on the Ras Tanura-Chiba, Japan route is at $60/t, down by $9/t for the same route's freight rate on 30 July when the August CP announcement was released.
"Because the freight rate is lower today as compared to freight rate for last month's CP. That's how they [Aramco] do it", said a Singapore-based trader.
The first round of CP recommendations were at $345-360/t for propane while butane was $10/t higher. The second round of CP recommendations were at $360/t and $370/t for propane and butane respectively.
The September propane CP was largely in line with the market expectations, although September propane CP swaps traded as high as $355/t yesterday.
Indian demand for butane rose that supported a steady September butane CP. Indian state-controlled importer Hindustan Petroleum issued a tender to buy a 22,000t+22,000t cargo for 11 September-5 October arrival and a 22,000t butane cargo for 3-21 September delivery. Indian private-sector importer Reliance Industries also sought a 22,000t butane cargo through a tender arriving ver 20-25 September.
LPG demand from China remained firm. Oriental Energy and Wanhua Chemical Singapore have been bidding in the open market for propane and evenly split cargoes.
The Argus Middle East Index (AMEI) for cargoes loading in the Mideast Gulf from 21-30 September was at $356/t for propane and $369/t for butane as of yesterday. The Argus Far East Index (AFEI) for propane and butane was last assessed at $361.75/t and $374.75/t respectively, indicating a grade spread of -$13/t.
