Europe propane values rise on cold weather, healthy demand in Asia

03 February 2012 16:28  [Source: ICIS news]

LONDON (ICIS)--European spot propane values increased on Friday as freezing temperatures across Europe and healthy demand from Asia supported firmer numbers, market traders said.

The most notable price increase was in the ARA (Amsterdam, Rotterdam, Antwerp) region, where prices reached levels of $1,010-1,020/tonne (€768-775/tonne) FOB (free on board) Rotterdam, up by $115-120/tonne from the previous week.

Milder temperatures during the fourth quarter and the beginning of January had resulted in well-supplied conditions in the propane market, as there was significantly less demand for propane as a heating fuel.

Buying interest from the petrochemical industry was also quiet during this period. Producers were cracking less propane because of concerns that downstream demand was decreasing due to the eurozone debt crisis.

However, sources said the wintery conditions across Europe have resulted in higher demand for propane and this has absorbed the length in the market.

Sources also said there were healthy levels of demand from the usually mild-weathered Mediterranean region, but added that supply there was also tight.

In addition, propane stocks in Asia are low and this has opened the arbitrage from Europe to Asia. Sources said the majority of propane volumes are heading east and this is contributing to tight conditions.

“Everything is going to Asia,” a source said.

The source added that it expects prices to increase going forward, as stocks in Europe decrease because of current strong demand.

($1 = €0.76)

By: Sarah Trinder
+44 20 8652 3214

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