Viewpoint: European coaster rally under pressure

Spanish Market: LPG
29/12/23

High European supply of LPG and weak heating demand could hinder the typical seasonal rally for coaster vessel prices in 2024.

Freight rates for 1,800-5,000t coasters tend to follow a clear seasonal trend. Rates start rising in December or January and continue pushing higher until around May before a rapid decline. Between 2022 and 2023, the Argus 1,800t Tees to ARA rate rose from $48/t on 12 December to $75/t on 26 May, before plummeting back down to $42.50/t by 25 July.

Additional heating requirements in winter boosts demand for LPG in Europe and north Africa, which supports higher rates for coasters because they are often used to transport cargoes for prompt top-ups of LPG during unforeseen shortages or to take advantage of brief intra-European arbitrages. During the busier winter period in the LPG market, charterers secure more coasters in Contract of Affreightment (COA) agreements, to deal with higher flows and avoid spot price volatility. Many trader 're-lets' come off the spot market so firms can use them for their own requirements. This compels charterers to compete over fewer available vessels — pushing up rates.

This trend could be hampered in 2024 as key drivers of European LPG demand falter while supply is high. LPG requirement for the heating market has been minimal in 2023 and inventories are high. The petrochemical industry, a key consumer, is likely to maintain lower run rates at propane dehydrogenation (PDH) plants because of weak olefin margins, weighing on the need for LPG as a feedstock.

US LPG over here

While demand wanes, LPG stocks are likely to remain high, in part because of the high amount that will probably continue to be imported from the US.

Very Large Gas Carrier (VLGC) voyages through the Panama Canal dropped in 2023 because of low water levels, and are slated to fall further in January and February. This has driven up US exports to northwest Europe and into the Mediterranean, because voyages from the US to east Asia avoiding the Panama Canal take around two weeks longer and have sometimes proven unfeasible.

LPG imports to northwest Europe hit 698,000t in November, the second highest on record, with 92pc coming from the US, according to Argus data. US imports have produced an LPG oversupply that depressed regional prices and rendered the Tees, UK, to Mohammedia, Morocco, trade virtually inactive in the fourth quarter of 2023.

These trends are likely to continue well into 2024, reducing demand for coaster vessels as higher supply and lower prices suppress the need for small top ups, and this could dampen the seasonal rise in freight rates. The size of the small coaster fleet is projected to remain broadly the same, while a weak petrochemical market could push more vessels into LPG deliveries, further pressuring rates.

ETS uncertainty

One uncertainty in the market is the EU's extension of its emissions trading system (EU ETS) to maritime emissions from 1 January.

The ETS is designed to decrease CO2 emissions by requiring businesses to purchase EU Allowances (EUA). Owners of cargo and passenger ships above 5,000 gross tonnes travelling to, from or between EU ports will be required to pay for 40pc of their emissions. Many owners have indicated they will pass the costs on to charterers, yet the industry standards for this cost remain unclear.

Small coasters will not be counted under the regulation as they are below the tonnage threshold, which could give them a competitive edge and provide a modest lift in demand.

By Leonard Fisher-Matthews

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12/05/25

Naphtha no longer competitive feedstock: Braskem

Sao Paulo, 12 May (Argus) — Brazil-based petrochemical producer Braskem is pursuing a strategic shift in polymers production by favoring natural gas liquid (NGL) feedstocks and moving away from naphtha. Naphtha is no longer a competitive feedstock in the petrochemical sector, driving the need for greater flexibility in raw material sourcing, chief executive Roberto Ramos said Monday on the company's first-quarter earnings call. The transition to lighter feedstocks is part of a broader initiative to enhance efficiency, reduce costs, and improve competitiveness amid evolving global petrochemical dynamics, Ramos said. The company's plan focuses on increasing the use of ethane and propane as primary feedstocks in Mexico and Brazil. In Mexico, Braskem has inaugurated an ethane import terminal, which will provide a stable supply to its operations. The facility has the capacity to store 80,000 b/d of ethane, while the polyethylene (PE) plant processes 66,000 b/d. This surplus storage has prompted considerations for a new PE unit in Mexico to maximize the available feedstock. In Brazil, Braskem aims to reduce reliance on naphtha-based PE production by integrating more natural gas-derived inputs. The company is evaluating projects to utilize feedstocks sourced from shale gas extracted in Argentina's Vaca Muerta formation. The petrochemical complex in Rio Grande do Sul, which operates with a mixture of naphtha and natural gas, is among the facilities targeted for increased gas utilization. Braskem's Rio de Janeiro facility is also undergoing expansion of its gas-based assets, adding two new furnaces that crack ethane and propane to increase capacity to 700,000 t/yr. This increased production is anticipated to lower unit production costs and improve profitability. The move to gas-based production is expected to optimize operations and align Braskem's facilities with cost-effective supply chains, Ramos said. The shift comes as global trade dynamics continue to influence raw material availability. While US-China trade agreements have temporarily eased tariff pressures, Braskem is trying to position itself to navigate long-term supply chain uncertainties by diversifying its production inputs. Ramos has also indicated potential investments in ethanol dehydration technology, which would allow select facilities to convert ethanol into ethylene, further supporting PE production with an alternative renewable feedstock. Production and sales Braskem said its first-quarter domestic resin sales fell by 4pc from the same period in 2024, but sales were little changed from the prior quarter. Domestic resin sales totalled 807,000 metric tonnes (t) in the first quarter, down from 839,000t a year earlier. Resin sales volumes remained in line with the fourth quarter last year, but the company highlighted a quarter-on-quarter increase in PE and polypropylene (PP) sales volumes of 2pc and 3pc, respectively, offset by a 16pc reduction in PVC sales. In Mexico, Braskem Idesa's PE sales fell by 11pc from the same period in 2024 and by 5pc quarter-on-quarter, as the company is looking to manage inventory ahead of a planned maintenance shutdown in the second quarter. The plant utilization rate reached 79pc, rising from the fourth quarter on higher ethane availability through the Fast Track solution. But utilization fell by four percentage points year-on-year, mainly due to reduced supply of ethane from Mexico's Pemex. Braskem posted a first-quarter profit of $114mn, rebounding from a loss of $273mn a year earlier and a loss of $967mn in the fourth quarter last year. By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Polish seaborne LPG imports rise on Russia embargo

07/05/25

Polish seaborne LPG imports rise on Russia embargo

The EU ban on some Russian imports led to higher utilisation of Poland's Baltic Sea terminals, writes Waldemar Jaszczyk London, 7 May (Argus) — Polish seaborne LPG imports surged in the first quarter as the country's Baltic Sea terminals became the market's main supply route following the EU's ban on Russian propane-butane mix and propane arrivals. But the growth was capped by reduced re-exports to Ukraine, softening domestic demand and more butane arriving from Russia. The four Baltic Sea terminals received 320,000t of LPG in January-March, up from 282,000t a year earlier, Kpler data show. European LPG distributor SHV's 900,000 t/yr Gdansk facility received 181,000t, and the Alpetrol-run 420,000 t/yr Gdynia terminal took 89,000t, up by 26pc and 37pc, respectively. Deliveries to state-owned fuel supplier Orlen Paliwa's 250,000 t/yr Szczecin terminal rose by 24pc to 37,000t but were below the 50,000-60,000 t/yr seen in previous years given modernisation works. The firm plans to raise Szczecin throughputs by 50pc to 400,000 t/yr by mid-2025. These offset a decline in imports to petrochemical producer Azoty's 437,000 t/yr propane dehydrogenation (PDH) complex in Police by more than a half to 19,000t. Azoty is negotiating a sale of the plant to Polish oil firm Orlen as it looks to cut debt accrued largely to develop it. The EU embargo on Russian LPG, which took effect on 20 December, boosted seaborne intake by forcing Polish importers to shift their supply routes to northwest Europe. Propane and propane-butane mix accounted for over 90pc of Russia's LPG exports to Poland, while normal butane and isobutane, which are not sanctioned, took the balance. Russia was the key supplier to Poland historically, with a 43pc share of all imports in 2024 at 1mn t/yr, according to Polish LPG association POGP. But weaker import demand as a result of stockbuilding prior to the embargo's start and reduced re-exports to Ukraine, which has shifted its supply routes to Danube river ports in the south, limited the increase in seaborne arrivals. And rising intakes of pure normal butane and isobutane from Russia by rail, which is then blended with propane and sold as autogas, has also weighed on Baltic imports. Russian butane deliveries averaged around 30,000 t/month in the first quarter compared with the more typical 80,000 t/month prior to sanctions. Poland seaborne LPG imports Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

NWE propane prices bounce back from multi-year lows

07/05/25

NWE propane prices bounce back from multi-year lows

Prices have recovered from a ‘Liberation Day' slump but have not yet reached their pre-tariff level, writes Efcharis Sgourou London, 7 May (Argus) — Northwest European propane prices have rebounded after slumping in the wake of US president Donald Trump's tariff announcement on 2 April. But they remain below pre-tariff levels after Trump ratcheted up his trade war with China a week later. Propane swaps and large cargo prices on a cif Amsterdam-Rotterdam-Antwerp (ARA) basis hovered at $450-460/t over the second half of April, more than $80/t above the five-year lows reached on 9 April, when Trump watered down tariffs on all but China, hiking this rate to 145pc. But prices were still more than $100/t below where they stood prior to Trump's announcement on 2 April. An unexpected lack of availability when spot buying interest emerged over the second half of April helped the large cargo and swaps values rebound. A few bids lodged for a mid-to-late-May delivery of 22,400t lifted the physical price relative to front-month paper to premiums of $9-12/t, after it had fallen to a discount of $1.50/t in early to mid-April, when the price collapsed. The unmet bids shed light on the level of premium needed to lure regional selling, while fears of an excess of US LPG being redirected to Europe owing to its trade war with China cooled as the market awaits the wider ramifications later this month — Beijing's 125pc retaliatory tariff on US goods starts from 13 May. Just over 600,000t of US LPG was shipped to northwest Europe in April, largely unchanged on March and close to the rolling six-month average, Kpler data show, while about 400,000t is forecast to arrive in May as of 7 May. The US-northwest European arbitrage is also unfavourable for spot trade despite recent cif ARA price gains. North Sea selling was also stable last month compared with March, with the UK and Norway exporting 400,000t of LPG in April, and forecast to ship just over 300,000t in May as of 7 May, according to Kpler. But this is significantly lower than a year earlier as production in the North Sea continues to undershoot expectations. NWE large cargo propane, swap price Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

India mulls swapping Mideast Gulf and US LPG

07/05/25

India mulls swapping Mideast Gulf and US LPG

Indian importers could make $20-30/t if they swap Middle Eastern term imports with US cargoes, writes Rituparna Ghosh London, 7 May (Argus) — Indian LPG importers are considering swapping contracted imports from the Middle East with US cargoes to enable them to ship the former supply to China, owing to its 125pc tariff on US LPG, according to market participants. Abu Dhabi's Adnoc has offered to supply Indian buyers with discounted US cargoes compared with Mideast Gulf exports priced on the basis of state-run Saudi Aramco's contract price, traders say. The Middle Eastern supply can then be sold to China to meet its shortfall from lost US imports of mainly propane because of the tariff. Indian state-run refiner BPCL says it can make a $20-30/t profit on swapping Mideast Gulf and US cargoes. Rival firms and importers IOC and HPCL have yet to disclose if they are considering cargo swaps. Delhi has directed importers to guarantee enough supply arrives if the US-China tariffs lead to such swaps, which is likely to include more imports from the US. The US loaded four evenly split propane-butane cargoes on to the VLGCs Eneos Gunjo , BW Mindoro , Shahrastani and Vivit Dubhe over 14-23 April, which are headed to India for delivery in the second half of May, ship tracking data show. Traders in Singapore have meanwhile approached Indian refiners to purchase their term imports from the Middle East for resale in the spot market — an offer that has been declined by the refiners. Delhi has said it is considering eliminating a 2.5pc import tax on US LPG and ethane in order to strengthen trade ties with the US. But the rate is small and IOC, HPCL and BPCL are already exempt from it, meaning the impact would be negligible, market participants say. Private-sector firm Reliance Industries would benefit from the move as India's sole importer of US ethane, bringing in around 1.3mn t in 2024, down by a fifth from a year earlier, Kpler data show. India's LPG imports from the US have historically been miniscule. The country brought in 120,000t of US LPG from a total of 21.4mn t last year, with most of its supply coming from the UAE at 8.2mn t, Qatar at 5.1mn t and Saudi Arabia at 3.4mn t, according to Kpler. Around 85-90pc of India's LPG imports are tied to long-term contracts with these three Middle Eastern countries, while spot trading represents just 10-15pc. India also imports mainly evenly split propane-butane cargoes, while US exporters ship more full propane cargoes to China. Ethane appeal The removal of the tariff on US ethane is unlikely to have much impact on imports in the short term given a lack of infrastructure to accommodate it. But it will support India's long-term plan to use more US ethane for its expanding petrochemical industry. BPCL and state-owned gas firm Gail are investing in new ethane-fed cracker projects at existing petrochemical facilities to capitalise on the abundant availability of cheap US ethane and the growing fleet of very large ethane carriers. This follows Reliance switching to US ethane at its 1.5mn t/yr ethylene cracker in Jamnagar in west India's Gujarat state over the past few years, having previously relied on ethane extracted from LNG imports from the Mideast Gulf. Gail operates two 450,000 t/yr crackers at its Pata petrochemical plant in Uttar Pradesh in northern India, which can use either ethane or propane. This arrives through the Hazira-Vijaypur-Jagdishpur pipeline having been fractionated and processed from LNG at Hazira on the west coast of Gujarat. BPCL is also increasingly integrating its refining operations with petrochemicals, but only has 500,000 t/yr of propylene capacity at its 310,000 b/d Kochi refinery in Kerala. BPCL is investing close to $6bn to develop a petrochemical complex including an ethane-fed cracker at its 156,000 b/d Bina refinery in Madhya Pradesh, while Gail is spending a similar amount on a facility that will include a 1.2mn t/yr ethane-fed cracker near its 5mn t/yr LNG plant at Dabhol in Maharashtra. US LPG exports to India US ethane exports to India Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US targets Iran’s LPG exports pre-nuclear talks

07/05/25

US targets Iran’s LPG exports pre-nuclear talks

US efforts to curtail Iran's LPG exports may prove fruitless as Tehran's key trade with China is independent of the sanctioned firms, writes Ieva Paldaviciute Dubai, 7 May (Argus) — The US Treasury Department has for the first time imposed sanctions directly targeting Iran's LPG industry, as it looks to exert pressure on a sector involved in significant exports to China. The US Treasury on 22 April announced sanctions on Iranian "LPG magnate" Seyed Asadoollah Emamjomeh, his son Meisam Emamjomeh, and his corporate network, which is "collectively responsible for shipping hundreds of millions of dollars worth of Iranian LPG and crude oil to foreign markets". This includes Emamjomeh's Tinos I — a 93,000m³ (55,000t) VLGC built in China in 2024, which allegedly attempted to load LPG from a terminal in Houston for export to China on its maiden voyage in June 2024. Washington recognises that Iran's LPG industry is a major source of revenue for Tehran, funding the regime's nuclear and advanced conventional weapons programmes and its support for terrorist proxies in the Middle East. The US administration continues to impose new sanctions on Iran despite both sides attempting to ease tensions as they hold high-level talks on Iran's nuclear programme, after US president Donald Trump ordered his administration to exert " maximum pressure" on Tehran . Yet the sanctions' impact on LPG trade may prove limited. "The nature of [Iran's LPG trade with China] is independent of Emamjomeh or his son and will continue pretty much as is," consultancy FGE's Middle East managing director Iman Nasseri says. "Sanctioning these companies only adds extra costs to the middlemen, who switch to other companies that they have or will set up, while changing the name or ownership of a vessel is also very easy." Iran's LPG exports boomed during 2022-24 , largely owing to less-stringent sanctions under former US president Joe Biden. China is the dominant buyer of Iranian LPG, taking 8.3mn t of the 10.7mn t exported from Iran in 2024, Kpler data show. This figure is an estimate as tracking Iran's exports is complicated by its use of a " shadow fleet" of LPG carriers . "The illicit [Iranian LPG] network has many nodes, and it is more difficult to choke them all off, especially if the US is wary of undermining other trade with countries such as the UAE, Oman, Malaysia and others [that receive Iran's LPG]," US think-tank the Center for a New American Security's adjunct senior fellow Rachel Ziemba says. "At the same time, the US could now be less worried about undermining relationships with China as direct US-China trade is collapsing." China's imports of US LPG, mainly propane, are on course to end from mid-May when Bejing's 125pc tariff kicks in. China is considering exemptions for ethane . But there has been no indication that US propane will also be given a reprieve, according to market participants — in spite of the Chinese petrochemical sector's dependence on it. China is increasingly turning to the Middle East for supplies, but these shipments largely come with butane in split cargoes. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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