ARGUS MARKET VIEWPOINT
Mild winter will not dent Europe LPG prices
Support comes from ongoing lack of imports from the key global supply hub, the US Gulf Coast (USGC). This has capped northwest European propane availability for most of 2017. And the export of local production to the strong Asian markets that are also dragging USGC cargoes east continues to exacerbate the impact of declining cross-Atlantic supply.
Asian buyers have been offering USGC sellers premiums of around $40-50/t for month 2 deliveries compared with prices of month 1 deliveries in northwest Europe since mid-September, peaking near $60/t in mid-October. This is significantly higher than the $25/t premium recorded on average during the same period last year. The higher premium, which naturally prompts US sellers to send cargoes to Asia-Pacific, is set to remain constant in the first half of 2018, supported by continued strong Asian demand.
Asian buyers have been offering USGC sellers premiums of around $40-50/t for month 2 deliveries compared with prices of month 1 deliveries in northwest Europe since mid-September, peaking near $60/t in mid-October. This is significantly higher than the $25/t premium recorded on average during the same period last year. The higher premium, which naturally prompts US sellers to send cargoes to Asia-Pacific, is set to remain constant in the first half of 2018, supported by continued strong Asian demand.
Read in full:
Northwest European propane prices will remain firm far into the first half of 2018, even without the fillip of above average domestic heating demand.
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