High VLGC rates lift LPG prices for Asian importers

Market: LPG
19/09/23

Record freight rates are causing a seismic shift in import pricing, which is having a knock-on effect on premiums to contract prices, writes Frances Goh

LPG importers in Asia-Pacific have been confronted by record freight rates for VLGCs this month at the same time as term contract renewals begin in earnest, hoisting regional prices in turn.

The benchmark Ras Tanura-Chiba VLGC rate from the Mideast Gulf to northeast Asia rose by nearly a third to $155/t between 1 September and 15 September as vessels took longer journeys from the US to Asia to avoid Panama Canal congestion, reducing availability. This occurred as a wide US-Asia LPG arbitrage led to maximum loading from the US Gulf coast, despite weather-related issues.

A shift in pricing for imports to southeast Asia and south China has compounded the situation. State-run Saudi Aramco has posted lower monthly contract prices (CP) since June despite tighter availability, market participants say. This has led to traders offering at large premiums to the CP to ensure a margin exists after buying low-cost fob cargoes once factoring high VLGC rates, they say.

Offers to south Chinese buyers for October cargoes came in at $120/t premiums to October CP paper, tracking freight rates from Ras Tanura to south China of around $100/t and higher-priced fob deals from the region. Buyers in south China, weaned on CP-linked pricing, spurned the offers having paid premiums around the $20/t mark three months earlier — three with terminals in Qinzhou and Gulei withdrawing tenders to buy this month.

Already weak margins for Chinese importers owing to higher LPG prices have dampened October demand and led to deferrals. But winter looms and demand from new propane dehydrogenation plants in the country is set to increase, meaning buyers will have to decide whether to pay for higher freight rates or risk paying even greater prices in November.

Meanwhile, supply availability in the US and Mideast Gulf is capping export prices, with Mont Belvieu at just 35pc of WTI crude by mid-September compared with 51pc a year earlier, and October propane CP swaps at $125/t discounts to equivalent Argus Far East Index prices in mid-September compared with an average discount of $33/t this year.

VLGC rates

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21/03/25

US ethane output, demand at records in 2024: EIA

Houston, 21 March (Argus) — US ethane production rose to a record last year on higher prices relative to natural gas, while exports and domestic consumption climbed to new highs on increased petrochemical demand, the US Energy Information Administration (EIA) said Thursday. US ethane output in 2024 rose by 6.8pc to an all-time high of 2.83mn b/d, up from 2.65mn b/d in 2023, according to EIA data. Most of the production increase came from the Permian basin, with Texas inland output increasing by 139,000 b/d to a record 1.58mn b/d and New Mexico refining districts rising by 9,000 b/d to 191,000 b/d, also a record. In the US east coast, the Appalachian No. 1 refining district, comprising much of the Marcellus shale formation in Pennsylvania and West Virginia, increased production by 37,000 b/d to a record 327,000 b/d, accounting for 12pc of total US production, up from 11pc in 2023. The production hike resulted from higher rates of ethane recovery from the natural gas stream, EIA said. Recovery was incentivized as ethane prices strengthened relative to natural gas. During 2024, Mont Belvieu, EPC ethane's premium to its fuel value — based on day-ahead natural gas at the Waha hub in west Texas — averaged 17.91¢/USG, up from 13.64¢/USG in 2023, even as outright ethane prices averaged 5.55¢/USG lower at 19.02¢/USG, according to Argus data. The increase in Permian ethane recovery resulted in large part from negative Waha gas prices for large swaths of the year. US consumption rises 8.4pc Product supplied of ethane, a measure of domestic consumption, rose last year by 8.4pc to a record 2.33mn b/d, up from 2.15mn b/d in 2023, according to EIA data. Consumption rose to records in the US east coast and Gulf coast regions, driven entirely by higher cracker operating rates, as no new ethane crackers came online during the year. Ethane consumption in the US Gulf coast rose by 109,000 b/d to 2.1mn b/d, while consumption in the US east coast nearly tripled to 103,000 b/d, up from 37,000 b/d in 2023. The east coast surge was driven by Shell's 1.6mn t/yr Monaca, Pennsylvania, ethane cracker ramping up production after coming online near the end of 2022 . Exports climb 4.5pc US ethane exports last year rose by 4.5pc to a record 492,000 b/d, up by 21,000 b/d from 2023, the EIA reported. China took the bulk of shipments and saw the largest increase in imports, spurred by increased petrochemical demand and ramped-up construction of import infrastructure. The US exported 227,000 b/d of ethane to China, up by 14,000 b/d from 2023. Ethane exports to Canada rose to 76,000 b/d, up by 11,000 b/d from 2023, while exports to India fell by 9,000 b/d to 65,000 b/d. Ethane shipments to Mexico averaged 21,000 b/d last year, up from 17,000 b/d in 2023. The Asia-Pacific region last year took nearly 60pc of US ethane exports, followed by the Americas at just over 20pc and Europe at just under 20pc. The Americas were broadly responsible for most of the growth in imports from the US year-on-year, with receipts up by 17,000 b/d and the proportion of the total rising for the first time since 2020. The proportion of exports going to the Asia-Pacific region fell for the first time since 2018, in part because attacks in the Red Sea slowed exports to India during the first half of 2024. Ethane exports from the US are poised to rise further in the next three years, as Enterprise Products' new Neches River terminal in Texas, which will be able to ship up to 360,000 b/d of ethane or propane, is scheduled for operations in starting in 2026. Energy Transfer's Marcus Hook, Pennsylvania, export terminal, which can ship 75,000 b/d of ethane, is adding refrigeration to boost its capacity to 90,000 b/d. By Joseph Barbour Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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US ethane cracking margins at 10-month low

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India’s giant LPG pipeline project faces further delay

18/03/25

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18/03/25

India’s giant LPG pipeline project faces further delay

The world's largest pipeline has been beset by delays but promises to shorten transportation times within the country, write Rituparna Ghosh and Matt Scotland Mumbai, 18 March (Argus) — The commissioning of the world's largest LPG pipeline in India is unlikely to happen in June and may not take place until at least the second half of the year because of technical issues at Kandla port, according to local industry sources. The 2,800km Kandla-Gorakhpur pipeline project that connects the country's import terminals on the west coast to inland demand centres all the way to northern India has been snagged by technical challenges at the site around Kandla port in Gujarat state, the sources say. The project has been postponed a number of times since prime minister Narendra Modi laid the foundation stone at Gorakhpur in 2019, in large part owing to the Covid-19 pandemic. Project engineers in early 2023 when the worst of the pandemic was over had put its estimated start at the end of the year , but by the end of 2024, state-controlled refiner IOC's pipelines director Senthil Kumar said it would be ready by March this year . Recent local media reports citing Kumar suggest the project would now be completed by June. But this deadline is unlikely to be met given the issues at Kandla, industry sources say. The opening of the pipeline is not expected to significantly boost LPG imports given terminal capacity constraints on the west coast, but it will reduce transportation times for LPG shipments to inland markets that are currently carried by trucks, they say. IOC — which is developing the project alongside peers Bharat Petroleum and Hindustan Petroleum with shares of 50pc, 25pc and 25pc, respectively — is reducing the number of trucks it operates that carry LPG from Kandla to northern India this year, the industry source say. The pipeline will transport around 8.25mn t/yr of LPG, around 25pc of India's total demand, IOC says. Around 340mn residential consumers in Gujarat, Madhya Pradesh and Uttar Pradesh will benefit from uninterrupted and cost-effective supply, the company says. Total investment will be around $1.2bn. LPG will be fed to the line from import terminals in Kandla, Dahej, Pipavav and Mundra, as well IOC's 276,000 b/d Koyali and BPCL's 156,000 b/d Bina refineries. The pipeline will deliver to 22 bottling plants in India's three most populous states, with the added supply intended largely for lower-income rural users under the PMUY subsidy scheme. India's ceramics industry in the Morbi region close to Kandla also stands to benefit from propane shipments made by the pipeline, which will travel through the area, the sources say. Demand for propane in Morbi currently stands at about 4mn m³/d of natural gas equivalent while PNG use is 3mn m³/d, with prices of both similar on an energy equivalent basis, local market participants say. Demand for propane from the region's industrial sector is expected to grow in the coming years as more is imported on India's west coast . The Kandla terminal received 3.2mn t of LPG last year, while the Dahej facility took in 1.38mn t, the Mundra terminal 812,000t and Pipavav 625,000t, Kpler data show. Around 1.53mn t of this came from the UAE, 710,000t from Qatar and 592,000t from Saudi Arabia. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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AltaGas highlights need to target non-US export markets

18/03/25

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AltaGas highlights need to target non-US export markets

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