Sluggish LPG production prompts regional supply squeeze in ARA hub

Refinery downtime has risen in Northwest Europe and the Mediterranean, leading to a squeeze in supply-side fundamentals in the European LPG market.

“What we’ve...got is these lower production levels in October having a bit of an impact on availability, allowing bids to get high,” a source said.

Outages in early October were projected to exceed 900,000 b/d for the week ended Oct. 4 and grow to over 1 million b/d by the following week.

“If refinery run rates stay as low as they have been then the local volume is not going to be necessarily here,” the source said.

“For now, it’s an October phenomenon as they [refineries] struggle to restart fully,” they added.

Major turnarounds have been recorded at Socar's Aliaga refinery in Turkey, Pembroke in the UK, TotalEnergies Raffinerie Mitteldeutschland in Leuna, Germany, Shell Rheinland in Germany (Godorf section), BP Gelsenkirchen in Germany, and Shell Energy and Chemicals Park Rotterdam.

Inland LPG prices boom

Prices in the inland propane and butane markets have risen to over-one-year highs in the past couple of days as issues and maintenance at refineries prompt supply constraints in the Amsterdam-Rotterdam-Antwerp hub as winter heating demand ramps up.

“Stuff on that side of things is going to bump up ARA and small cargo prices, but that takes a while to reach the large cargo market,” the source said.

This week a possible glitch at the TotalEnergies refinery in Antwerp delayed loadings, leading to a tightening in product availability in ARA. The company was not immediately available to comment.

“It’s expensive for the moment, TotalEnergies in Antwerp is down,” another source said. A third added: “You can't load there at the moment.”

Butane FOB ARA barge prices reached a 22-month high this week, peaking at 106% as a proportion to naphtha on Oct. 10, and holding steady Oct. 11. This was the strongest level recorded since Nov. 17, 2022, when the market was assessed at 108% versus naphtha.

Meanwhile, the Platts propane FCA ARA railcar and truck assessment was marked at $815/mt on Oct. 10 and Oct. 11, the highest price since March 2023 -- an 18-month-high.

Also, a fire as a result of smoldering was reported at Shell Energy and Chemicals Park Rotterdam, formerly known as Pernis. The company was not immediately available to comment.

The fire occurred in the morning of Oct. 10 and led to smoke, according to a local authority. Some butane was released, it said.

It previously said on Oct. 1 that it started a major refinery maintenance on seven of 60 units, due to last until end-November.