10 February 2012 15:07 [Source: ICIS news]
LONDON (ICIS)--Prices for large propane cargoes in northwest Europe reached a 14-month high on Friday because of cold weather and an open arbitrage between Europe and Asia.
Large propane cargoes are trading at $1,025–1,035/tonne CIF (cost, insurance & freight) NWE (northwest Europe).
The last time prices were this high was during December 2010, when extreme wintry conditions affected Europe.
The current spell of cold weather in Europe has lent support to higher propane values, as strong demand for it as heating fuel has resulted in tight supply conditions.
An arbitrage between Europe and Asia has also contributed support to values.
“We’re still seeing robust demand for propane in Asia,” one source said.
However, the support from these bullish factors could be short-lived.
Some sources expect the arbitrage to Asia to narrow in coming weeks if freight rates rise.
In addition, one source said the cold weather may not last long and buyers need to be careful not to buy too much propane.
“March is still backwardated, so people do not want to be left with [propane] stocks by then,” the source said.
($1 = €0.75)
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