India resumes LPG purchases for March delivery after 16% drop in Jan imports

India's state oil importers have resurfaced seeking spot LPG cargoes for H1 March deliveries to meet recovering demand and fill prompt shortfalls, traders said, after Petroleum Planning and Analysis Cell data showed Feb. 24 that imports in January fell 15.87% on the month to 1.394 million mt.

January imports were the lowest since last June at 1.389 million mt, after a jump in December to 1.657 million mt, which were up 4.1% on the month to the highest in five months, the data showed.

The country's November LPG imports declined 1.13% on the month to 1.59 million mt in November, amid pandemic-related control measures and a seasonal dip following the October Diwali celebrations.

Lower Indian imports in January came as the country's LPG production rose 0.52% versus December to 1.142 million mt, the highest since March 2020 at 1.163 million mt, the PPAC data showed.

Imports had spiked 20.3% on the month to 1.702 million mt in August, the highest on PPAC record since 2012 to meet festive demand, though this also led to a supply overhang and port congestion, trade sources said.

India's LPG imports in calendar 2021 totaled 17.27 million mt, up 6.63% from 2020, the data showed.

The country's consumption of LPG -- used mainly as cooking fuel -- rose 3.75% on the month to a record-high of 2.569 million mt in January, PPAC data showed.

India's LPG consumption has soared in recent years to 27.558 million mt in fiscal 2020-21 (April-March) from 4.803 million mt in FY 1997-98. Indian imports were traditionally butane-heavy, though the LPG import ratio has largely evened out in recent years.

Trade sources said after the recent lull in spot imports, Indian buyers are seeking H1 March-delivery spot cargoes, as most term cargoes may be focused on H2 March arrivals.

Saudi Aramco had announced a cut in butane volumes for March term acceptances, with some lifters heard given less or no butane, or faced lifting delays, sources said.

"The Saudis told lifters there were no plus tolerances on butane for March," one market source said.

Continued maintenance work on the jetty at the Yanbu lifting terminal on the Red Sea coast lasting through end-February or mid-March, was also heard to impact Saudi LPG exports in March to 500,000 mt, same as February, but down from over 600,000 mt in January, sources said.

Import tenders

State-run Bharat Petroleum Corp. Ltd. is closing a tender Feb. 25 with next-day validity, seeking three 45,000 mt evenly split propane-butane cargoes, for H1 March delivery.

But trade sources said that after Hindustan Petroleum Corp. Ltd. closed its reissued tender on Feb. 24, seeking a 45,000-mt evenly split propane-butane cargo, a mixed cargo comprising 8,000 mt of propane and 12,000 mt of butane for H2 March delivery, it was later heard canceled.

The pause in Indian imports have helped to limit waiting times at discharge ports, market sources said.

While Mundra, Sikka, and Pipavav were not seeing delays, average discharge delays at Mundra were four to five days; Dahej were one to two days, Mangalore three to four days, Ennore four to five days, Vizag three to four days and Haldia two to three days.

This is in contrast to November when huge imports to meet festive demand triggered heavy port congestion, forcing some vessels to wait more than two weeks to discharge, VLGC fixtures from ship brokers showed.

With the tightness in Saudi butane supply, plus demand from India, South Korea, Indonesia and Thailand for butane or mixed cargoes, the butane prices have leapfrogged above propane.

On Feb. 24, March CP butane swap was indicated at $21/mt above propane swap, compared with parity when Saudi Aramco set the February term CPs at $775/mt.

Term lifters in their first round of recommendations lifters proposed to Saudi Aramco the March term propane CP be set between $770/mt and $785/mt and the March butane CP between $780/mt and $795/mt.

March propane CP swap was pegged on Feb. 24 at $832/mt and butane at $853/mt, though the rally seen on Brent crude due to the Russia-Ukraine crisis, has also been pushing up LPG swaps, brokers said.

The February term CPs had marked a rebound after two months of falls that had snapped six straight months of rises, S&P Global Platts data showed.

The second round of recommendations are expected by Feb. 25 and Aramco was due to announce March CPs on Feb. 28, trade sources said.