LPG import prices to China have increased for January delivery because of tight supply from the Mideast Gulf, the key source of Chinese imports.
A 23,000t propane cargo for delivery to east China in January on a cfr basis was assessed at a premium of $90/t to January contract price (CP) swaps on 24 December, $22/t higher than the cash premium on 2 December, according to Argus assessments.
The higher premiums are the result of tight cargo supply from the Mideast Gulf. State-owned Saudi Aramco has cancelled four full cargoes of LPG that were due to load in January 2020 from Ras Tanura or Yanbu to its term customers, two traders said. Loading of another full cargo has been delayed to February or March.
Aramco was scheduled to load around 18 cargoes in January, market participants said. These details have not been confirmed by Aramco.
The cuts to Aramco's January LPG term supply have come in the wake of this month's agreement by the Opec+ group of major oil producers this month to reduce output. The revised deal adds an extra 500,000 b/d of cuts to the existing 1.2mn b/d, plus a further voluntary reduction of 400,000 b/d by Saudi Arabia.
The drone attack on Saudi oil infrastructure in September has also likely hit Saudi supply volumes, according to traders.
"It is not about the high premiums that buyers have to pay, it is about where to find the Mideast Gulf cargoes these days," said a Singapore-based trader.
Other regular buyers from the Mideast Gulf include India and southeast Asia. Indonesian state-owned importer Pertamina has twice issued a tender seeking two evenly-split 22,500t propane and 22,500t butane cargoes for either February delivery or January and February loading over the past two weeks. But both tenders were cancelled because of a lack of offers, said traders.
By Yixiang Zeng
