Singapore — Saudi Aramco's acceptances of June-lifting term cargo nominations were announced with no cuts but two Japanese lifters had delays of up to 20 days, while Indian lifters have sought lifting deferments as inventory remained ample after pre-election stockpiling, traders said Thursday.
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Japanese trading firms Astomos and Itochu were heard to have lifting delays, while South Korean trader E1 Corp. received dates in line with their nominations. Another South Korean trader, SK Gas has received lifting dates six to seven days earlier, traders said.
But traders said Saudi Aramco's lifting delays would not have much impact on the market especially since two other major Middle Eastern producers, ADNOC of the United Arab Emirates and Qatar Petroleum, did not have any cuts or major delays to their June lifting program.
"The market is looking longer in June, so having delays could be a blessing. There is too much butane and less demand in India," one Western trader said.
A North Asian trader said he was quite surprised that the Saudis were still delaying some liftings amid talk that Indian lifters were asking for deferments.
In the physical market Wednesday, an oil company was offering evenly split LPG cargoes, FOB Middle East, at a parity to the June Saudi Contract Prices and bidding at a slight discount, putting pressure on FOB Middle East premiums.
Demand from India, a major importer of butane, has been satisfied after stockpiling ahead of general elections in April/May, pushing inventories to optimal levels and prompting state-run Indian Oil Co. to cancel its optional cargoes from the US, slated for June arrival offered in recent tenders, a market source said.
Buyers from India have received cargoes from the US for the first time to secure supply during the elections, sources said.
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Traders also said US Gulf Coast propane prices took a hit overnight as record-high exports failed to limit bulging inventories. Total US propane exports rose 43,000 b/d to a record of 1.35 million b/d in the week that ended Friday, weekly Energy Information Administration data showed.
Yet, propane inventories increased by 2.76 million barrels to 62.7 million barrels as production grew 52,000 b/d to 2.1 million b/d.
India's low demand amid high stocks, coupled with comfortable butane supply in the region with the arrival of split cargoes from the US, as well as China's appetite for propane feedstock as propane dehydrogenation plants returned from maintenance, widened the premium of propane to butane.
Taiwan's Formosa Petrochemical Corp.'s demand via a July 2019-June 2020 term tender was also limited to propane, while Indonesia's recent purchases of evenly split cargoes for the festive season had been done selectively via spot tenders and included offers from the US.
The premium of propane to butane for the June CP swap widened to $22/mt by mid-week from $15-$18/mt before. This was a switch from Saudi Aramco's May term CPs in which propane was set at a $5/mt discount to butane.
Butane remained at a premium to propane in the US Gulf Coast, but the premium has narrowed to the lowest since December on Tuesday. This was attributed to growing North American butane production, while gasoline blending demand for butane tends to fall in summer due to strict reid vapor pressure restrictions, market sources said.
--Ramthan Hussain, firstname.lastname@example.org
--Edited by Nurul Darni, email@example.com