Saudi Aramco announces acceptances of Feb loading term LPG with cancellations

Singapore — Saudi Aramco has announced acceptances of term LPG nominations for February loading with cancellations for at least seven lifters, traders said Jan. 20, following its decision at the Jan. 5 OPEC+ meeting to cut oil production by 1 million b/d in both February and March.

Traders said lifters affected by the cargo cancellations included South Korean trader E1 Corp., Taiwan's CPC Corp., Norway's Equinor, Indonesia's state-run Pertamina, Japanese traders Astomos and Gyxis and Franc's EDF.

A trader said one Chinese lifter could also have had February cargoes canceled, though this could not be immediately confirmed.

Another trader noted the absence of Chinese and Indian lifters from the list of those that have had cargoes canceled.

A third trader said the impact of the shortfall in Saudi cargoes on the market was seen in early swaps indications Jan. 20, with February Saudi CP propane swaps -- reflecting FOB Middle East prices -- $17/mt above the Argus Far East Index, which reflects CFR North Asia prices and normally involves cargoes from the US. February CP swaps were valued $2/mt above the FEI Jan. 19. CP swaps normally lag the FEI.

However one trader said that some lifters would be happy to have evenly split propane/butane cargoes -- such as those supplied by Aramco -- canceled in view of the slow demand for such cargoes in Asia.

Indian demand, which is normally for split cargoes, is in a lull early in the new year, and while Indonesia's Pertamina has closed a tender seeking a split cargo for end-February, the volume is small.

The premium of propane to butane also narrowed to $38/mt in early indications Jan. 20, from $40/mt valued Jan. 19, amid lower mixed cargo supply.

The backwardation in February/March CP propane swaps widened to $34/mt in early indications Jan. 20, versus $30/mt valued Jan. 19.

Propane has also been pushed up by healthy demand in China, South Korea and especially Japan, where a harsh winter and costly LNG prices have stoked demand for alternatives such as fuel oil, crude, as well as LPG to drive power generators.

Saudi Aramco announced acceptances of January-loading term LPG nominations with delays to some lifters and advancements for others, market sources said in December. Some lifters reported seeing delays ranging from two to five days from their nominated loading dates, with an Indian importer seeing a delay of two to three days, market sources said.

Qatar Petroleum had announced early January acceptances of February-loading term cargoes in line with lifters' nominations without cuts, delays, advanced loadings or changes to tolerance volumes, traders said. QP had also offered a evenly split spot cargo for Feb. 24-25 lifting.

This was followed by ADNOC's announcement of February-lifting cargoes with no cuts, but some loading delays.