Singapore — Saudi Aramco has set its January 2019 Contract Price for propane at $430/mt, down $15/mt from the December CP, and its butane CP at $420/mt, up $5/mt from the December CP, the company said Monday.
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The December propane CP is within the middle range of traders' expectations, while the butane CP is lower than expected.
Front-month January propane CP swaps closed at $427/mt and butane was assessed at $421.50/mt in Asia last Friday. Front-month January propane CP swaps averaged $432/mt for the whole month in December.
The January propane CP swap was fairly volatile in December, largely due to the volatility in Brent crude oil futures.
January CP swaps stood as high as $458/mt on December 10 then fell as low as $407/mt by December 21, only to rebound to end the month at $427/mt.
Late last week, the January/February backwardation was assessed at a slight backwardation of 50 cents/mt, from a $1/mt contango at the previous close on Thursday.
In December, the Asian LPG market saw healthy demand from Chinese buyers who were grappling with high tariffs imposed on imports of US cargoes, while Iranian shipments were being curtailed by US sanctions.
Reflecting market sentiment, Kuwait Petroleum Corp. sold a 44,000 mt evenly split LPG cargo via tender for January 28-29 loading, FOB Mina al Ahmadi, to an Asian trading firm at a premium of around $10/mt to Saudi contract prices, S&P Global Platts reported earlier.
Aramco had set the propane CP for January 2018 at $590/mt and the butane CP at $570/mt, Platts data showed.
Aramco's CPs, which set the price of LPG lifted from the Saudi ports of Yanbu, Ras Tanura and Ju'aymah under term supply contracts, are closely watched by the market as they tend to set a base level for LPG pricing for most markets East of Suez.
--Jonathan Nonis, firstname.lastname@example.org
--Edited by Wendy Wells, email@example.com