Argus LPG World
May 2018
US butane exports surge
The US to Asia-Pacific price arbitrage for spot butane between Mont Belvieu, Texas, and the Argus Far East Index (FEI) widened to a three-month high of $98.80/t in mid-April — spurring a surge in Asian buying interest for butane heavy large cargoes.
US butane exports are increasingly becoming part of regular long-haul global LPG trade flows, after years of propane dominance. Butane exports from the US hit the highest level recorded by US government agency the EIA in January, the latest data available. Butane exports reached 184,000 b/d in January, with more than 33,000 b/d sent to China, the EIA data show.
Waning US domestic demand because of the seasonal shift to summer-grade gasoline blending weakened Mont Belvieu EPC butane prices to a 2018 low of 83.63¢/USG at the start of April. This in turn widened the US to Asia-Pacific butane arbitrage and spurred a flurry of buying interest. US butane prices subsequently rebounded, rising to 101.75¢/USG on 26 April — but higher prices in Asia-Pacific continued to lend support to export demand.
Demand for butane-heavy cargoes in Asia has recently been strong. AFEI butane averaged around 81.6pc of naphtha prices in April, down from an average of 84.4pc of naphtha in March, making it a more attractive cracking feedstock.
Turnarounds at Chinese refineries lifted demand for alkylate and MTBE in that region, bolstering butane demand. Premium-grade gasoline prices in north China rose by at least $20/t at the start of March as the turnaround season began.
Interest for butane-heavy cargoes also strengthened because of a less attractive propane arbitrage from the US — as well as continuing uncertainty surrounding China’s proposed 25pc tariff on US propane. China imposes only a 1pc import tax on LPG from all sources at present, so the rise could have a significant impact.
Cargo cancellations
A number of cancellations for US propane export cargoes were seen in April, but market participants noted that some were turning to butane-heavier cargoes to keep ships moving and prevent further cancellations in late April and May.
The US is also seeing interest from European petrochemical crackers for butane. The US butane arbitrage to Europe averaged $68.90/t in April, with freight to the region at about $22/t during the same period. Demand for butane has been strong in both northwest Europe and in the Mediterranean region — where butane rather than propane is primarily used in the cylinder market — tightening supplies and supporting prices.
The demand for US butane exports kept April and May spot US butane prices strong, with May prices averaging only a 0.6¢/USG discount to April. Export demand for butane in June is less certain at this point, with June averaging a 2¢/ USG discount to May during April.
US butane exports are increasingly becoming part of regular long-haul global LPG trade flows, after years of propane dominance. Butane exports from the US hit the highest level recorded by US government agency the EIA in January, the latest data available. Butane exports reached 184,000 b/d in January, with more than 33,000 b/d sent to China, the EIA data show.
Waning US domestic demand because of the seasonal shift to summer-grade gasoline blending weakened Mont Belvieu EPC butane prices to a 2018 low of 83.63¢/USG at the start of April. This in turn widened the US to Asia-Pacific butane arbitrage and spurred a flurry of buying interest. US butane prices subsequently rebounded, rising to 101.75¢/USG on 26 April — but higher prices in Asia-Pacific continued to lend support to export demand.
Demand for butane-heavy cargoes in Asia has recently been strong. AFEI butane averaged around 81.6pc of naphtha prices in April, down from an average of 84.4pc of naphtha in March, making it a more attractive cracking feedstock.
Turnarounds at Chinese refineries lifted demand for alkylate and MTBE in that region, bolstering butane demand. Premium-grade gasoline prices in north China rose by at least $20/t at the start of March as the turnaround season began.
Interest for butane-heavy cargoes also strengthened because of a less attractive propane arbitrage from the US — as well as continuing uncertainty surrounding China’s proposed 25pc tariff on US propane. China imposes only a 1pc import tax on LPG from all sources at present, so the rise could have a significant impact.
Cargo cancellations
A number of cancellations for US propane export cargoes were seen in April, but market participants noted that some were turning to butane-heavier cargoes to keep ships moving and prevent further cancellations in late April and May.
The US is also seeing interest from European petrochemical crackers for butane. The US butane arbitrage to Europe averaged $68.90/t in April, with freight to the region at about $22/t during the same period. Demand for butane has been strong in both northwest Europe and in the Mediterranean region — where butane rather than propane is primarily used in the cylinder market — tightening supplies and supporting prices.
The demand for US butane exports kept April and May spot US butane prices strong, with May prices averaging only a 0.6¢/USG discount to April. Export demand for butane in June is less certain at this point, with June averaging a 2¢/ USG discount to May during April.
For access to more global LPG market news, analysis and prices, simply fill out the short form on the right to request a free trial of the Argus LPG World business intelligence service.
May 2018
Argus LPG World informs readers of the latest developments in international LPG markets, supported by expert analysis of prices and fundamental data. Request a free trial below.
Argus LPG World informs readers of the latest developments in international LPG markets, supported by expert analysis of prices and fundamental data. Request a free trial below.
Argus Consulting Services - LPG
Argus Consulting Services is a leading provider of information and insight to the LPG industry. We offer data and analytical services and have significant experience with a wide range of clients – from financial institutions, producers, terminal and storage operators to downstream businesses. The team also produces the monthly Argus LPG Outlook, providing a short term forecast of key LPG prices up to two years into the future. Learn more >
Argus Consulting Services is a leading provider of information and insight to the LPG industry. We offer data and analytical services and have significant experience with a wide range of clients – from financial institutions, producers, terminal and storage operators to downstream businesses. The team also produces the monthly Argus LPG Outlook, providing a short term forecast of key LPG prices up to two years into the future. Learn more >
Argus Consulting Services - LPG
Argus Consulting Services is a leading provider of information and insight to the LPG industry. We offer data and analytical services and have significant experience with a wide range of clients – from financial institutions, producers, terminal and storage operators to downstream businesses. The team also produces the monthly Argus LPG Outlook, providing a short term forecast of key LPG prices up to two years into the future. Learn more >
Argus Consulting Services is a leading provider of information and insight to the LPG industry. We offer data and analytical services and have significant experience with a wide range of clients – from financial institutions, producers, terminal and storage operators to downstream businesses. The team also produces the monthly Argus LPG Outlook, providing a short term forecast of key LPG prices up to two years into the future. Learn more >
Copyright © 2018
All rights reserved
Notice: By accessing this site you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices, graphs or news content) in any form or for any purpose whatsoever without the prior written consent of the publisher.
ARGUS, the ARGUS logo, ARGUS MEDIA, ARGUS DIRECT, ARGUS OPEN MARKETS, AOM, FMB, DEWITT, JIM JORDAN & ASSOCIATES, JJ&A, FUNDALYTICS, METAL-PAGES, METALPRICES.COM, Argus publication titles and Argus index names are trademarks of Argus Media Limited.
Notice: By accessing this site you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices, graphs or news content) in any form or for any purpose whatsoever without the prior written consent of the publisher.
ARGUS, the ARGUS logo, ARGUS MEDIA, ARGUS DIRECT, ARGUS OPEN MARKETS, AOM, FMB, DEWITT, JIM JORDAN & ASSOCIATES, JJ&A, FUNDALYTICS, METAL-PAGES, METALPRICES.COM, Argus publication titles and Argus index names are trademarks of Argus Media Limited.
Argus LPG World
