Asian propane prices hit six-month low on excess supply

07 May 2012 11:12  [Source: ICIS news]

SINGAPORE (ICIS) -- Asian propane prices have declined to a six-month low because of excess supply since they started falling from early March, industry sources said on Monday.

The price of propane for delivery in the first half of June closed at $764.5/tonne (€581.02/tonne) on 4 May, the lowest since 21 October 2011, according to C1 Energy, an ICIS service in China.

Prices started to fall on 5 Mar from $1,297.5/tonne, according to C1 Energy.

The oversupply of propane in Asia has been increasing and it is driving down regional prices, said a trader who added that falling international crude prices is an important reason for the fall in regional prices as well.

Producers in the Middle East still have May spot cargoes to offer, said a European trader.

Qatar International Petroleum Marketing (Tasweeq) has at least two cargoes, Saudi Aramco about four cargoes and Petrochemical Commercial Corp (PCC) about four as well, the trader added.

These cargoes need to be purchased by Asian countries since producers cannot ship them to the West for arbitrage as prices are also weak in Northwestern Europe, the trader said.

Residential demand for propane in Asia is weakening amid rising temperatures which decreases its use in heating, said industry sources.

“The price trend in Asia will be determined by whether the chemical industry can consume the extra propane supply,” said a Japanese importer.

However, there are only four Asian companies with crackers which can use propane as a substitute for naphtha and propane accounts for only a maximum of 20% of the feedstock for these crackers, industry sources said.

($1 = €0.76)

By: Ken Chan
+65 6780 4359

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