Demand from Mediterranean pushes up LPG prices

14 June 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--Liquefied petroleum gas (LPG) demand has increased in the Mediterranean and into the Middle East ahead of the Ramadan religious holiday, sources said on Friday.

Supplies in the Mediterranean are understood to be tight, with prices in the region for both butane and propane increasing this week.

Butane and propane were both at $810-820/tonne (€608-625/tonne) FOB (free on board) Med (Mediterranean) on Friday, up $40/tonne and $55/tonne respectively on last week.

A producer said the increased Med demand was in the lead up to Ramadan with a number of regions looking to secure supplies before July.

The demand in the Mediterranean and also from Asia has seen less product available in Europe, and coupled with delivery issues from flooding on the Rhine and Elbe rivers, prices across the board are feeling some upward pressures.

A distributor said rail car prices for propane are around $780-781/tonne FCA (free carrier), but there is little product available at the terminals, with refineries in maintenance and the flooding preventing oil from reaching the operating refineries.

A buyer said the propane market was backwardated by around $20/tonne between June and July which was deterring buying for storage.

Petrochemical buyers are also looking to buy naphtha over propane as the feedstock of choice, with the spread between naphtha and propane at minus $68/tonne, giving naphtha an advantage.

The butane market was stronger this week, with demand coming from the cracking sector and higher throughput.

Sources said butane is more popular than propane with buyers at the moment, but there is strong demand for both propane and butane from Asia, which is putting pressure on ship availability.

($1 = €0.75)

By: Kate Wilcock
+44 208 652 3214

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