Rising Europe LPG prices are deterring buyers - market

07 September 2012 17:30  [Source: ICIS news]

LONDON (ICIS)--Rising European LPG prices are deterring buyers, sources said on Friday.

Tightness in both the propane and butane markets, stemming from reduced supplies and a lack of material in storage, has seen both products make significant price gains.

Propane barges are assessed at $1,015-1,020/tonne (€802-806/tonne) FOB (free on board) ARA (Amsterdam, Rotterdam, Antwerp), up $155/tonne from last week, while butane barges are at $975-980/tonne FOB ARA, having climbed by $85/tonne, sources said.

“The lack of supply is a problem, but CIF [cost, insurance and freight] prices are too high,” a propane cargo trader said. “A ship was offered here [in Europe], but it cost too much and went to another region.”

“There’s a lack of availability, prices are very high. There’s no product around, across the board,” a second LPG trader said.

An LPG barge trader said: “There’s no product around, nothing in storage and demand is picking up, especially from Germany and the Netherlands, because of the Shell [refinery] maintenance."

A butane cargo trader said: “It’s very tight, there’s a lack of supply. There’s been maintenance in the North Sea for a long period.”

Worse still, propane prices have been pushed above those of rival feedstock naphtha, rendering the latter the first choice for petrochemical buyers.

"They'll [petrochemical buyers] use naphtha," a naptha trader said.

Butane prices are understood to be at parity with naphtha.

September normally marks the start of the heating fuel restocking season. However, with prices elevated and insufficient volumes available, the outlook for LPG is unclear.

($1= €0.79)

By: Jo Pitches
+44 208 652 3214

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