West Mediterranean butane prices hit multimonth lows on heightened selling activity

The butane coaster market in the West Mediterranean dropped to its lowest level in outright price terms and as a proportion to naphtha since July on April 19, according to data from S&P Global Commodity Insights.

On April 19, the butane FOB West Med coaster market fell $18 from the previous close on April 18, when Platts assessed it at $540/mt, S&P Global data showed. It was assessed at $522/mt, or 77%, as a proportion to naphtha on April 19, a drop of 3% and the lowest value seen since July 2023.

The fall on April 19 was attributed to an offer in the Platts Market on Close assessment process, with Cepsa offering a 3,800 mt FOB butane coaster basis Huelva for delivery April 28-30 at $523/mt. The offer was deemed competitive and therefore was used to set the assessment.

"There is no demand for vessels," a West Med-based trader said.

Activity in the West Med butane complex has been quieter throughout the year amid limited buying activity from Morocco, the second largest LPG market in Africa, according to participants.

Several factors, notably Morocco's diplomatic dispute with Algeria, has seen Morocco increasingly turn to the US and Spain for its LPG supply, analysts at S&P Global said.

"Butane imports have grown steadily during the past decade as economic growth, population growth and subsidized pricing boosted demand," Fernando Covas, consulting director at S&P Global and Galina Borisova, senior analyst, said in a recent report. "In 2023, butane imports from the US surpassed 2 million mt from just 543,000 mt in 2020, a sign of increased availability and competitive pricing for US butane delivered via very large gas carriers (VLGCs)."

Algerian volumes have essentially disappeared since the countries broke diplomatic relations in August 2021, the analysts added.

As such, bearishness has plagued the complex throughout the recent winter period, with prices remaining subdued in comparison to previous years, according to S&P Global data.

The butane market soared to highs of $861.81/mt or 117.31% as a proportion to naphtha in January 2023, while prices in 2022 peaked even higher at $1,129.40/mt in March or 121.88% in January 2022. Contrastingly, prices in the winter have remained stagnant, failing to breach $700 or 101% percentage to naphtha, according to S&P Global data.