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Front-cycle CFR N Asia propane to front month CP flips to premium after one month

https://www.chemnet.com   Sep 25,2020 S&P Global Platts
The differential of front-cycle CFR North Asia to front month CP swaps switched to a premium level on Sept. 24 for the first time in around a month, while H2 October delivery propane also jumped to one-month highs on healthy end-year demand as well as shipment delays from the US Gulf and Panama due to hurricanes.

A fire that flared early Sept. 24 at an Oil and Natural Gas Corp.-owned gas processing unit in Hazira, western Gujarat, which has been brought under control, also stoked expectations of more imports from India to cover possible supply shortfalls to customers, traders said.
"I am not sure it will affect Indian imports, but maybe looks there may be some impact on Indian imports," one Asian trader said.

But another Asian trader said India's gas production is only 2 million mt/year and most of its LPG supplies are from refineries. "Their refinery production matters most, so I don't think so ," he said when asked if there would be any impact on import demand.

The gas plant at Hazira processes natural gas received from the state-run oil and gas explorer's western offshore fields in Gujarat. The plant's total gas processing capacity is 46.9 million cu m/d.

ONGC Petro additions, or OPaL, was running smoothly at Dahej after the fire at ONGC's Hazira gas processing plant to which it is linked by the Hazira-Dahej Naphtha pipeline, or HDNPL, a company spokesperson said. ONGC was working to resume normal operations as soon as possible, the company tweeted on Sept. 24, though it was not available for comment.

ONE-MONTH HIGHS
CFR North Asia H2 October delivery propane was assessed up $7.5/mt day on day, at $372/mt on Sept. 24, matching the level seen on Aug. 25, Platts data show.

Front cycle H2 October CFR North Asia differential to October CP was at $6.5/mt premium on Sept. 24, versus a 50 cents/mt discount the previous session. This was the first premium since Aug. 24 when it was at $2/mt, before dipping to a discount of $1.50/mt on Aug. 26, S&P Global Platts data show.

Trade sources said South Korean buyers were buying for end-year winter demand as they capitalized on the CP propane swap October/November contango structure, which early on Sept. 25 was indicated at $11.75/mt, versus $9.50/mt the previous session.

South Korean trader SK Gas was also seen bidding on Sept. 25 for a physical propane cargo for H2 October delivery, at October FEI minus $9/mt, which equated to $370.5/mt.

Shipping sources said the Houston Ship Channel was closed to traffic for nearly 70 hours between Sept. 20 and Sept. 23, before it was reopened for inbound traffic.

Shipping sources said about 12 Very Large Gas Carriers, six medium gas carriers and five Handysize ships had been waiting in the US Gulf for an average of three days and that it would take some time to restore shipments to normal volumes.

Amid the market uncertainties, Asian traders and lifters were mixed on their initial expectations of the October term Saudi contract prices, due to be announced around the middle of the week starting Sept. 27. This comes amid ongoing negotiations between Saudi Aramco and lifters over term contracts.

A Japanese trader expects propane to be set at $380/mt and butane at $385/mt, while a Chinese trader sees propane at $370/mt and butane at $5/mt to $10/mt higher.

Early on Sept. 25, brokers indicated CP propane swaps at $369/mt versus $365.50/mt the previous session. October butane CP swap was indicated $5/mt above propane on Sept. 25.

Saudi Aramco set its September term propane CP at $365/mt and butane at $355/mt.
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