Brazil LPG demand spikes in response to quarantines
Brazilian LPG sales are soaring as stay-at-home orders boost demand for the popularly used cooking gas.
In 12 Brazilian states, including Sao Paulo, LPG demand increased by more than 30pc and in another seven states demand is up by 10pc-20pc in the first half of April compared to the same period of 2019, according to hydrocarbons regulator ANP.
Brazilian LPG demand has been stagnant in recent years, with total consumption reaching 13.20mn m3 in 2019, compared to 13.28mn m3 in 2013, according to the ANP. The fuel has been losing market share to natural gas as more homes are connected to gas distribution networks.
The spike in LPG demand has created supply bottlenecks for the fuel, which is typically consumed in 13kg cylinders.
After facing widespread disruptions earlier this month, distribution has returned to near normal in nine states. But in six states, up to 20pc of deliveries remain behind schedule, according to the ANP.
In an effort to meet demand, Brazilian state-controlled Petrobras has expanded LPG imports. Since 30 March, the company has imported a total of 350,000 metric tons (t) of LPG, which is enough to supply 27.4mn 13kg cylinders. Last week alone, the company said it received two shipments with a total of 62,900t of LPG.
In contrast to slumping demand for other fuels, LPG sales have increased in recent weeks. The company said it would continue to compensate for falling local production through increased imports.
But Petrobras also warned that any changes to the tax regime for hydrous ethanol, which have been discussed in recent weeks amid plummeting oil prices and weakening demand for the biofuel in contrast to cheaper gasoline, could have unexpected consequences for LPG supply.
"If you offer another subsidy for one derivative at the expense of another, it will disrupt the supply chain… (and reduce) demand for gasoline," Petrobras downstream director Anelise Lara said last week. If Petrobras produces less gasoline, LPG output will also fall, which could exacerbate supply interruptions, even with increased imports, she said.
LPG is produced along with gasoline in the refining process.
The ANP has increased its monitoring of LNG supplies and said it expects distribution to normalize by the end of the month.
In response to the Covid-19 pandemic, Brazilian cities and states have instituted a patchwork of quarantines, ordering people to stay home to check contagion.
Brazil has close to 40,000 confirmed cases of the new coronavirus, and more than 2,500 recorded deaths, according to Johns Hopkins University's Coronavirus Research Center.
Related news posts
![](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D-1%26hash%3DFC2BEDE406483FEF5FDB9549159BAC11&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more