Saudi Aramco LPG term lifters recommend January CPs fall below December

Term lifters of Saudi Aramco's LPG cargoes have recommended that the January contract prices be set between $700/mt and $725/mt, and butane about $30/mt to $40/mt below this level.

Saudi Aramco is expected to announce the January term CPs by the end of the week of Dec. 27. If the recommendations are accepted, this would be the second fall in the CPs after six consecutive months of increases.

Month-one January Saudi CP propane swap was valued at $730/mt Dec. 28, and butane was $40/mt below this level. The January CP propane swap was indicated at $726/mt Dec. 29 while butane was pegged $34/mt below that.

One trader said the January CPs will be difficult to predict given the recent upswing in crude oil prices. February Brent crude futures last traded at $79.02/bbl Dec. 29, up 16 cents/bbl on the day, S&P Global Platts data showed.

Saudi Aramco has set the December term propane CP at $795/mt, and butane CP at $750/mt, the lowest since September when propane and butane were both set at $665/mt, Platts data showed.

The lower January CP recommendations reflect a decrease in demand for LPG as buying interest from India remained low due to an overhang of supplies following the annual Diwali celebrations, when demand typically spikes, trade sources said.

Lower demand from China is also expected as more propane dehydrogenation plants shut down for maintenance in January compared with December, trade sources said.

LPG demand for heating is also expected to be low, as South Korea is expected to enter an unusually warm winter, trade sources said.

"We have been seeing quite a disappointing winter demand everywhere so far due to a warm winter," industry sources said.

Winter demand in Japan was also heard to be low despite the recent cold snap as the country maintained robust inventories from advanced purchases, trade sources said.

Japan's LPG stocks fell almost 6% on the month to 1.711 million mt in November, snapping four straight months of increases, with propane stocks down 7.23% on the month at 1.215 million mt and butane inventory falling nearly 1.8% on the month to 496,000 mt, Japan LP Gas Association data showed. Total LPG imports fell almost 8.5% on the month to 756,000 mt in November.