Asia butane prices below propane on weak demand, abundant supply

14 August 2012 12:24  [Source: ICIS news]

SINGAPORE (ICIS)--Asian butane prices have been lower than those of propane since early August, as butane demand from the chemical industry is weak while supply is abundant, industry sources said on Tuesday.

On Monday, the prices of butane for delivery in the first half of September were at $930-935/tonne cost and freight (CFR) Japan, $25/tonne higher than propane, ICIS data showed.

“This is the first time in years to see propane prices higher than those of butane in summer”, said a Taiwanese importer who usually buys some butane each month to chemical users.

Butane demand from the chemical industry has been weak because it lost its economics against naphtha in cracking at the present price level, industry sources said.

Butane should be at least $20-30/tonne lower than naphtha to maintain economic sense for crackers,  said a Japanese trader.

However, the current level is only $15.5/tonne, according to ICIS data.

“Naphtha has swarmed into the Far East and resulted in relatively low prices,” said a South Korean trades.

Another reason for propane prices to exceed those of butane is sufficient butane supply from the Middle East. “Usually liquefied petroleum gas (LPG) cargoes from the Far East are of a ratio of 3:1 between propane and butane, but now most cargoes from this region contains equal propane and butane ,” said the Japanese trader.

The price difference between propane and butane is not likely to widen, said a market source, citing Southeast Asia’s demand for LPG with equal propane/butane ratio.

By: Lilian Hua

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