LPG Market Update: Industry News, Trends, and Key Developments
The global LPG market is currently experiencing dynamic shifts in supply and demand, influenced by factors such as refinery maintenance, geopolitical tensions, infrastructure developments, and evolving feedstock economics. Recent reports highlight key trends across different regions, requiring market participants to stay informed and adapt their strategies.
European Market Pressures
The European LPG market is experiencing price volatility due to a combination of factors:
· ARA Railcar Price Surge:
Propane railcar premiums in Northwest Europe have reached a seven-week high due to colder temperatures and unplanned refinery shutdowns in Germany. The premium of the 45t fca Amsterdam-Rotterdam-Antwerp (ARA) railcar assessment to 20,500t cif ARA large cargo prices hit $225/t on 13 February, the highest this year and up by 20pc since mid-January.
· Refinery Disruptions:
Unplanned shutdowns at refineries in southern Germany have tightened inland supply, increasing buying interest from ARA terminals. Some LPG suppliers have cut loadings by as much as 30%. The 90,000 b/d Neustadt refinery was taken offline after an explosion and fire and one of the production lines at the 310,000 b/d Karlsruhe refinery was shut down due to a technical fault.
· Natural Gas Influence:
High natural gas prices encourage North Sea producers to leave LPG in the natural gas stream, while refineries are increasingly burning LPG instead of gas.
· Naphtha Demand Softness:
Petrochemical cracking demand for naphtha in northwest Europe is under pressure as propane prices drop and downstream demand weakens. The cif northwest Europe naphtha-propane spread widened to $106.75/t on 13 February from $60.25/t on 13 January, marginally exceeding the 2024 average of $105.75/t. US LPG exports to northwest Europe reached 786,000t in January, the highest since June 2022.
· Bitumen output halted:
Bitumen production at TotalEnergies' 109,300 b/d Feyzin refinery near Lyon, central France, is halted from 10-20 February as part of a wider shutdown affecting the refinery's crude distillation unit (CDU) and reformer.
US Infrastructure Expansion
The US LPG market is expanding export capacity to handle increasing production:
· New Texas Terminal:
MPLX and Oneok are developing a new 400,000 b/d (12.6mn t/yr) LPG export terminal in Texas City, US Gulf Coast, slated to be operational by 2028. The project is likely to be fed by MPLX's Bangl pipeline and will include new NGL fractionators.
· Production Growth:
Domestic propane output rose by 5.7% year-on-year to a record 2.24mn b/d in November, while normal butane production climbed by 9.4% to a new high of 707,000 b/d.
Syrian Supply Challenges
Sanctions continue to impede Syria's access to crude and refined products, causing fuel shortages. Neighboring Jordan is stepping in to help by exporting around 500 t/d of LPG to Syria.
Naphtha Petchems Demand Under Pressure
Petrochemical cracking demand for naphtha is under pressure in Northwest Europe from two directions:
1. Propane prices have dropped sharply, making it a more attractive alternative feedstock.
2. Overall cracking rates are suffering from weak downstream demand.
The combination of these factors is limiting naphtha demand and affecting the broader petrochemical market.
Argus Pricing and Analysis
Market participants rely on Argus for independent price assessments and analysis of the LPG and NGL markets. Argus provides global daily, monthly, and forecasted prices along with forward curves and consulting services. Prices assessments include:
· Argus Far East Index (AFEI)
· Argus CIF ARA large cargo
· Argus LPG North Sea Index™ (ANSI™)
These pricing insights help traders, refiners, and petrochemical producers make informed market decisions.
Conclusion
The LPG market is influenced by supply disruptions in Europe, growing US export capacity, and geopolitical factors affecting regions like Syria. Market participants need to monitor these dynamics and utilize reliable pricing and analysis to make informed decisions.
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