LPG Monitor as of 01 February 2023



LPG Contract Price (CP)

LPG Contract Price (CP), commonly called the “Saudi CP” is the primary driver of LPG pricing in the Far East including the Philippines. It is the international price benchmark set at the beginning of each month by Saudi Arabia’s state - owned oil company Saudi Aramco.

Aramco's CPs, which set the price of LPG lifted from the Saudi ports Yanbu, Ras Tanura and Ju'aymah under term supply contracts, are closely watched by the market as they tend to set a base level for LPG pricing for most markets East of Suez.

The DOE refer to the LPG/Saudi CP and forex monthly average changes in determining/monitoring the price adjustments of LPG in the domestic market. Following the timing of the monthly changes in CP, domestic price of LPG also varies every first day of the month and remain constant throughout the whole month.

Like all other petroleum products, the Philippines has no influence over the LPG CP as the country’s domestic requirement is small versus the world demand.

For the month of February 2023, LPG Contract Price has increased by US$189.00/MT to US$ 790.00 /MT, from US$ 600.50/MT last month.

International LPG Market Development

News reports cited the following bullish factors behind the significant increase of the month’s LPG Contract Price:

  • Market perception of decreasing supply from Middle Eastern gas producers due to regular maintenance, particularly big producers – Abu Dhabi National Oil Company and Saudi Aramco’s Yanbu gas plant, and a fall in supply from Iran.

o Iran has the world's second-largest gas reserves but has limited production due to US economic sanctions.

  • S&P Global estimated that Middle East LPG exports would drop 1 million-1.5 million mt this year on lower gas production following the OPEC+ decision Oct. 5 to cut the oil production quota by 2 million b/d from November 2022 to December 2023.

  • Along with the tight supply/demand for propane in the FOB Middle East market, China is estimated with increased demand. S & P Global Platts projected China's LPG imports to grow double digits in 2023 on expectations of competitive feedstock, though demand from propane dehydrogenation plants could be moderated by a gradual recovery in petrochemicals margins.

  • In the spot market, Indonesia's Pertamina issued a buy tender for an even-split cargo for Feb 28-Mar 4 loading from the Middle East. The company was reported to have
     bought a similar cargo for Feb 22-28 loading at a premium in the low single digit to the February CP.

Upon industry consultation, following factors were mentioned that affected the increase:

  • Pockets of demand in South Korea, China and Japan due to extended winter and unusual cold weather adds up to regional LPG demand, coupled with the unfortunate timing of maintenance by the big producers as presented in the foregoing.
  • Market betting on sentiments, visualizing how the market moves. Overall, market sentiments add a lot to price volatility.

Domestic Prices      

Oil companies increased the price of LPG effective 01 February 2023 by P10.00/kg to P11.20/kg or about P110.00-P123.00 per 11-kg cylinder.

Auto LPG likewise increased by P6.25/liter.

Starting 01 February 2023, household LPG in Metro Manila are estimated to range from P934.00 to P1,118.00 per 11-kilogram cylinder.

Shown below are the retail prices of 11 Kg. Household LPG
in Metro Manila from full year of 2022 to February 2023

Year Domestic
Price
Adjustment/Kg.
Increase (-Decrease)
2022  
January 750.00-1010.00 (2.55)
February 793.00-1053.00 4.00
March 880.00-1100.00 7.95
April 915.00-1160.00 3.25-3.40
May 885.00-1113.00 (5.75)-(5.73)
June 840.00-1027.00 (5.91)-(5.80)
July 840.00-1027.00 (0.40)-(0.36)
August 828.00-1000.00 (2.07)-(1.70)
September 815.00-1000.00 (1.81)-(1.50)
October 797.00-1000.00 (3.15)
November 797.00-1000.00 3.50-3.55
December 860.00-1020.00 2.25-2.27
2023    
January 824.00-995.00 (3.00)-(4.20)
February* 934.00-1118.00 10.00-11.20

Note: *Prices for February 2023 are estimates
 

For more information, call the Department of Energy:
Pricing: 840-2187
LPG: 840-2130
Fuels: 840-5669
SMS: (0915) 4469421
Email: oilmonitor@lisporn.com
Website: www.lisporn.com

 

 

LPG Monitor as of 04 October 2022



LPG Contract Price (CP)

LPG Contract Price (CP), commonly called the “Saudi CP” is the primary driver of LPG pricing in the Far East including the Philippines. It is the international price benchmark set at the beginning of each month by Saudi Arabia’s state - owned oil company Saudi Aramco.

Aramco's CPs, which set the price of LPG lifted from the Saudi ports Yanbu, Ras Tanura and Ju'aymah under term supply contracts, are closely watched by the market as they tend to set a base level for LPG pricing for most markets East of Suez.

The DOE refer to the LPG/Saudi CP and forex monthly average changes in determining/monitoring the price adjustments of LPG in the domestic market. Following the timing of the monthly changes in CP, domestic price of LPG also varies every first day of the month and remain constant throughout the whole month.

Like all other petroleum products, the Philippines has no influence over the LPG CP as the country’s domestic requirement is small versus the world demand.

For the month of October 2022, LPG Contract Price has decreased by US$67.00/MT to US$569.00/MT, from US$636.00/MT last month.

International LPG Market Development1

  • Platts report noted that rising Middle East supply since May, along with steady exports from the US and Africa ahead of winter, have dragged Asia LPG prices down from 18-year highs in March.
  • It said, producers have been accepting largely in line with lifters' monthly term cargo nominations this year, while Qatar Petroleum and Abu Dhabi National Oil Co., or ADNOC, have been advancing loading dates to clear swelling inventory.

o In October-loading term nomination acceptances, ADNOC loadings were advanced by five to 10 days. ADNOC also had advanced loadings for September, August, and July cargoes.

o Qatar's acceptances of October-loading nominations were likewise advanced of its lifting dates. Qatar was heard to have offered up to three October-loading spot cargoes, one of which was sold at a $30/mt discount to Saudi Contract Prices to China Gas, underscoring recent deep discounts of FOB Middle East cargoes, and

o Kuwait Petroleum Corp. has regularly offered via spot tenders in recent months, and in early-August sold 44,000 mt of evenly split LPG for October 7-8 loading, at around $15/mt discount to October CPs, after selling a similar cargo for Sept. 11-12 loading.

  • Other than moving term cargoes at earlier-than-nominated dates, Middle East producers can offer spot cargoes on CFR basis2.
  • Rising Middle Eastern exports are consistent with January's market projections of 6.6% year on year increase in 2022 shipments, as competition for Asian markets intensifies amid growing supply from other producers.
  • The total 2022 exports from Qatar, the United Arab Emirates, Saudi Arabia, Kuwait, and Iran are estimated to rise to 38.9 million mt, from 36.5 million mt in 2021, Platts noted further.

Domestic Prices      

Oil companies decreased the price of LPG effective 01 October 2022 by P2.55/kg or about P28.05 per 11-kg cylinder. Auto LPG likewise decreased by P1.43/liter.

As of 01 October 2022, household LPG in Metro Manila are estimated to range from P786.95 to P971.95 per 11-kilogram cylinder.

Shown below are the retail prices of 11 Kg. Household LPG
in Metro Manila as of October 2022

Year Domestic
Price
Adjustment/Kg.
Increase (-Decrease)
2022  
January 794.00-1010.00 (2.55)
February 793.00-1053.00 4.00
March 880.00-1100.00 7.95-8.00
April 915.00-1160.00 3.25-3.40
May 885.00-1113.00 (5.73)-(5.75)
June 840.00-1027.00 (5.80)-(5.91)
July 840.00-1027.00 (0.36)-(0.40)
August 828.00-1000.00 (1.70)-(2.07)
September 815.00-1000.00 (1.50)-(1.81)
October* 786.95-971.95 (2.55)

Note: *Prices for October 2022 are estimates
 

For more information, call the Department of Energy:
Pricing: 840-2187
LPG: 840-2130
Fuels: 840-5669
SMS: (0915) 4469421
Email: oilmonitor@lisporn.com
Website: www.lisporn.com

 

_______
1 Platts news
2 CFR stands for Cost and Freight. CFR basis means that the seller will be responsible to arrange for the goods carried by sea to the port destination and provides necessary documents to the buyer.

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