Qatar Petroleum accepts July term LPG nominations with no cuts, delays: traders

Qatar Petroleum announced acceptances of July-loading term LPG cargo nominations without cuts or delays, traders said June 2.

One trader said some cargoes also had advanced loading dates, though details were not immediately available.

QP had accepted term cargo nominations for June in line with lifters' nomination, without cuts, loading delays or advancements.

Qatar around mid-May was heard to have also sold by spot tender 45,000 mt of propane for June 19-20 loading, with some sources saying it could have been sold at a discount of at least mid-teens to the Saudi June contract prices, FOB basis.

This extended Qatar's regular spot and term supply, leading other Middle Eastern producers, including Kuwait Petroleum Corp., or KPC, in keeping Asia amply supplied with LPG and helping to counter any shortfall in US shipments following multiple cancellations for June loading.

KPC has yet to decide on a new tender for July delivery, after selling six consecutive spot cargoes via tender for June to July 1 loadings.

FOB Middle East differentials were assessed June 1 at parity to the July CP swaps, after trading firm Petredec was heard to have bid a 46,000 mt propane-heavy cargo for July 1-5 loading, FOB Ras Tanura, Ruwais or Qatar, at CP July minus $5/mt.

Healthy Middle East supply

QP's acceptances for July will be followed by ADNOC around June 10-11 and Saudi Aramco around June 17. This comes as the Middle East market braces for ample LPG supply in June and July, after OPEC+ agreed to continue gradually easing production cuts and raise output in July.

This is in line with the alliance's April decision to return 2.1 million b/d to the market between May and July.

The group will meet again July 1 to decide on production policy beyond July.

With around 10 eastbound cargoes slated for June loading in the US canceled on the closed arbitrage up to May 21, VLGC rates on the Houston-Chiba route retreated to $90/mt over May 27-June 1 -- the lowest in almost three weeks. Middle East-Japan freight fell to $55/mt June 1, near five-week lows, according to Platts data.

US LPG exports so far in June were expected to be lower, estimated at 4 million mt compared with 4.4 million mt in May, a US trade source said.

Sources said they would not be surprised to see lower deliveries to China in June/July, following record-high deliveries to the world's top LPG consumer in May, which could potentially result in lower-than-usual need for additional cargoes the following two months.

In May, some 2.44 million mt were imported by China, up 29% on the month and 16% on the year, the source said.

But other trade sources said following the June-loading cancellations, weakening freight and recovering CFR North Asia LPG prices, could help reopen the arbitrage.

Front-cycle CFR North Asia propane was assessed June 1 at $580/mt, after touching a three-month high at $581/mt May 31, Platts data showed.

Prices had hit around eight-month lows at $508/mt April 20, Platts data showed.