Viewpoint: Petchems keep driving US LPG exports to Asia

: LPG
21/12/23

US exports of LPG into Asia are expected to continue to grow in 2022 as ongoing petrochemical demand in the region bolsters demand for US feedstocks, particularly propane.

The US continued to ship more than twice the volumes of LPG to Asia versus Europe in the second half of 2021, even as a spike in European heating demand improved the arbitrage to the region early in the fourth quarter.

US LPG exports to Europe in September, October and November totaled 2.16mn tonnes (t), or about 295,000 b/d assuming mostly propane, according to oil tracking analytics firm Vortexa, down from 2.3mn t during the same period of 2020. In contrast, exports into Asia continued to account for the lion's share of US export demand in the same three month period at 7.1mn t (969,735 b/d assuming mostly propane), up from 6.69mn t during the same months in 2020.

US export volumes rose as the arbitrage to both Asia and Europe widened sharply after propane prices at Mont Belvieu, Texas, retreated from prices in October that hit seven-year highs on low inventory concerns.

US Gulf coast fob propane prices stood as low as a $189/t discount to delivered prices on the Argus Far East Index on 17 November, the widest discount versus the FEI since the end of January 2021 when concerns over heating fuel supplies in parts of Asia pushed delivered propane prices higher.

The wide differential in mid-November followed strong pre-buying of LPG cargoes ahead of winter demand in Asia in early November, even as US buying interest waned late in the fourth quarter. US LPG retailers, concerned over historically low propane inventories, pre-purchased needed volumes for the domestic heating season in September and October, and by November had largely left the spot market, leaving US propane at Mont Belvieu comparatively weak to the international market. US propane inventories remained 16pc below year-ago levels at the start of December, according to the US Energy Information Administration (EIA).

Discussions for spot-loading propane cargoes out of the US Gulf coast hit a 2021 high of 9¢/USG over Mont Belvieu EPC propane in mid-November discussions, as Asia demand picked up. Prices subsequently retreated to as low as near a 5¢/USG premium as term LPG buyers appeared well supplied and uncertainty over freight delays left traders unwilling to purchase incremental cargoes, despite the wider arbitrage on paper.

By Amy Strahan

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25/03/05

Indonesia plans to build new 500,000 b/d oil refinery

Singapore, 5 March (Argus) — Indonesia plans to build an oil refinery with a planned capacity of approximately 500,000 b/d, as part of the country's push to develop its downstream sectors to ensure energy security. The refinery will be able to process domestic and imported crude oil, and will produce up to about 532,000 b/d of various oil products, according to the ministry of energy and mineral resources (ESDM). The construction of the refinery will require investments of up to $12.5bn, and it will help to reduce Indonesia's dependence on imports, said the ESDM. No details on timeline or location were provided. It is unclear how the new refinery fits with Indonesia's existing downstream expansion plans, many of which have stalled. The country has not built a new refinery since 1994, leaving it reliant on imports to meet demand for oil products, notably gasoline. Several new projects have been touted in recent years, including a joint venture between state-owned Pertamina and Russian firm Rosneft for a 300,000 b/d refinery and petrochemical plant at Tuban in east Java, but have yet to reach a final investment decision. The country's president Prabowo Subianto has set a target for reviving Indonesia's oil output to 900,000-1mn b/d by 2028-29. "We still have a lot of oil," said energy minister Bahlil Lahadalia last month, encouraging the use of enhanced oil recovery and urging exploration wells to be upgraded to production wells. The country's oil production currently stands at around 600,000 b/d , with state-owned refiner Pertamina accounting for 400,000 b/d of this, while the country's consumption amounts to more than 1.5mn b/d. Developing DME Another downstream initiative that the ESDM is planning is the acceleration of the development of dimethyl ether (DME) through coal gasification, to use it as a substitute for LPG and reduce imports. The development of the DME industry will "no longer depend on foreign investors," said Bahlil, adding that it will instead rely on domestic resources and capital, "which will be implemented through government policies." Indonesia already has the raw materials as well as the offtakers, while the technology, money and capital expenditure can all come from the government and domestic private sector, said Bahlil, so Indonesia does not have to be "dependent on other parties." Indonesia has agreed to provide $40bn worth of funding to 21 first-phase downstream projects. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US tariffs could crash auto industry: Ontario

25/03/04

US tariffs could crash auto industry: Ontario

Calgary, 4 March (Argus) — The tightly-intertwined US and Canadian auto manufacturing industry could grind to a halt in as little as 10 days due to US tariffs, according to Ontario premier Doug Ford. Raw materials and partially assembled vehicle components can cross the US-Canadian border between manufacturing plants as many as eight times before becoming a finished vehicle, Ford said today. But the 25pc tariffs the US imposed on most Canadian and Mexican goods effective today will add costs and disrupt supply chains. Canada and the US could have combined efforts to make the two countries the safest and secure, Ford said, but "... unfortunately, one man, president Trump has chosen chaos instead." Ontario, Canada's largest province by population and a major vehicle manufacturing hub, may also cut nickel exports to the US, Ford said, and may put a 25pc surcharge onto electricity flows into New York, Minnesota and Michigan if the tariffs persist. Canada supplied about 46pc of US nickel from 2019-2022 according to the US Geological Survey, and nearly 36TWh of electric power to the US. Ontario is also banning US companies from government contracts, including cancelling a $100mn contract with Elon Musk's Starlink internet services. Ford also directed the Liquor Control Board of Ontario (LCBO) to remove US products from its store shelves, meaning other retailers, bars and restaurants will also be unable to restock American goods. The LCBO is the largest purchaser of alcohol in the world, according to Ford, selling nearly C$1bn in products, including 3,600 products from 35 US states. Ontario's action comes after Prime Minister Justin Trudeau announced Canada's retaliation of 25pc tariffs on $30bn of US imports, followed by another $125bn of imports in 21 days' time. Canadian energy exports to the US are subject to a lower 10pc tariff. Alberta premier Danielle Smith called the US tariffs "both foolish and a failure in every regard." She called on her Canadian peers to fast-track the construction of dozens of resource projects to help relieve the country's dependence on the US for sales. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Japan petchem producers urged to turn to ethane

25/03/04

Japan petchem producers urged to turn to ethane

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New US export capacity to dampen pressure on VLGC rates

25/03/04

New US export capacity to dampen pressure on VLGC rates

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Mexico LPG retailers struggle as price cap hits margins

25/03/04

Mexico LPG retailers struggle as price cap hits margins

The spread between wholesale prices and retail price caps will now no longer cover operational costs, writes Cas Biekmann Mexico City, 4 March (Argus) — The spread between Mexican state-owned Pemex's LPG wholesale prices and government-controlled retail price caps is no longer enough to cover operational costs, domestic distributors association Amexgas has warned after three consecutive months of the cap remaining relatively unchanged. The average of 2,747 city specific LPG retail price caps, set by energy regulator the CRE, stood at 10.91 pesos/litre ($2.02/USG) for the week ending 8 March, with maximum prices ranging from Ps9.64/l to Ps12.54/l across the country owing to differing logistics costs. The average wholesale price from Pemex's 26 selling points was Ps8.22/l for the week, resulting in an average margin between the two rates of Ps2.69/l. This is not enough to cover the costs of salaries, fuel and maintenance, Amexgas said on 24 February. Inflationary pressures and regulatory changes, which force distributors to prove their regulatory compliance with several government entities, have further driven up operational costs, LPG distributors say. Amexgas does not oppose the government's price controls but disagrees with the way the CRE's methodology fails to adequately factor rising international LPG prices. Mexican imported propane prices from the US Gulf coast stood at 97.20¢/USG ($507.50/t) on 3 March, up by 5pc from a year earlier — when the price was 88.89¢/USG, the price cap was Ps10.64/l, Pemex's wholesale prices averaged Ps6.69/l and the margin was Ps3.95/l, or 47pc higher. The depreciation of the peso against the US dollar has also weighed on domestic LPG prices, as Mexico sources more than 60pc of its supply from imports. The exchange rate stood at Ps20.43/$1 on 3 March, compared with Ps17.02/$1 a year earlier, according to Mexico's central bank data. Mexico's LPG distributors recently urged the government to consider altering the price cap and simplify regulatory hurdles . Amexgas members in November 2024 announced plans to strike , citing lower profit margins and scarcer LPG supply. Government promises to establish working groups to tackle these problems prevented the strike from happening. But the government has since said it would not remove the price cap to protect families from potential LPG price hikes. Talks between the CRE and distributors are ongoing, but a new strike is not off the table, market participants say. Mexico largely relies on last-mile distributors to deliver LPG tanks and cylinders to residential and rural customers. Private-sector firms have played a crucial role in distributing LPG in Mexico for decades and prior to the country's landmark 2014 liberalisation of the energy market. Pemex's LPG imports dropped by 12pc on the year to 73,100 b/d (195,400t) in January, the lowest since October 2023, company data show, as US propane and butane prices increased. Mont Belvieu propane prices on the US Gulf coast averaged 89.7¢/USG ($468.50/t) in January, an 11pc increase from 80.5¢/USG a year earlier, as demand in the US grew when a winter storm hit in mid-January. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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