Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you a link to reset your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you a link to reset password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Agriculture | Natural Gas | Oil

Analysis: India to resume spot LPG imports in Sep after backlog clears

Commodities | Energy | Oil | Crude Oil | Refined Products | Coronavirus

Crude throughput hindered on reduced refinery runs

LNG | Natural Gas | NGL

Platts LNG Alert

Commodities | Oil | Crude Oil | Marine Fuels

Marine Fuel Strategy Seminar (at MEEPEC)

Bunker Fuel | Oil | Refined Products | Fuel Oil | Gasoline | Shipping | Marine Fuels

Security incident occurs on oil tanker off UK: sources

Analysis: India to resume spot LPG imports in Sep after backlog clears

Highlights

India pauses spot imports for several months on high stocks

Higher LPG production, slowdown in commercial demand weigh on market

India to post lower demand growth in 2020 due to pandemic: Platts Analytics

Singapore — India is expected to resume spot imports of LPG in September after clearing the current inventory backlog, as rising LPG production after state-owned refiners ramp up operating rates, and languishing demand from the commercial sector during the lockdown added on to domestic supply, market sources said in the week of June 15.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

"The LPG market is very long in India. We don't need additional imports now, we're all covered," a source at a state-owned refinery said.

"We're probably resuming [spot] imports in September, we'll see how the situation evolves, see how the lockdown is affecting demand," the source added.

Indian state-owned refiners Indian Oil Corp., Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd had sought an additional 776,000 mt of spot LPG for delivery between April and June at end-March and early April after India went under a nationwide lockdown on March 25, as demand for the cooking fuel surged, and to meet an increase in demand from the country's distribution of free LPG cylinders to 80 million households for April to June.

However, India had canceled multiple LPG cargoes for May and June arrival with suppliers in the Middle East after buying too much, and over-estimating the demand spike.

During the lockdown, India's LPG consumption in May posted an 8.7% increase month on month to a four-month high of 2.317 million mt. This also represented a 12.8% increase year on year.

India had extended its lockdown for two-and-a-half months until early June, and recently entered into a new phase termed Unlock 1.0 on June 8. Most economic activities have resumed and public spaces reopened.

"Domestic demand [right now] is normal," the source said. "Previously refinery output was restricted. Now refineries have increased operations, so LPG production is higher. As of now, we have no spot requirement," the refinery source said, adding that spot buying will resume when demand improves.

Indian state owned refiners IOC and BPCL have increased refinery run rates after the lockdown measures eased as demand for gasoline, diesel and jet fuel picked up.

IOC had raised crude throughput to 80% levels at its nine refineries, Platts reported previously. During the lockdown, the refiner had cut its overall run rates by 25%-30%.

BPCL had scaled up the average run rate at its four refineries to 75% as of June 2, and plans to operate its 15.5 million mt/year Kochi refinery at 90% by the end of June, according to an earlier Platts report.

"It seems Indian imports is not easy to return as many vessels are waiting offshore at Haldia for over 10 days," a North Asian trader said.

COMMERCIAL DEMAND FALLS

While residential LPG demand surged during the lockdown, commercial LPG demand dropped significantly, according to a report by S&P Global Platts Analytics.

There could be some diversion of subsidized domestic LPG cylinders into commercial use, based on a December 2019 audit report by the Comptroller and Auditor General of India (CAG) cited by the Platts Analytics report.

During the lockdown, the commercial enterprises using the subsidized domestic gas were not in operation, thereby affecting demand.

The lockdown had also affected the livelihood of the Pradhan Mantri Ujjwala Yojana, or PMUY, beneficiaries, who are entitled to free LPG connections and cylinders. Lack of economic opportunities have forced many people to move back to their home towns and villages. A lack of funds also increases the likelihood of households switching back to freely available biomass and woodchips for cooking needs.

Although lockdown restrictions have eased, a fear of a second wave of COVID-19 cases have kept people mostly at home.

"Due to weaker economic outlook and changing consumer behavior, revival of the business activities of commercial enterprises is going to be slow. Subsequently, diversion of domestic LPG cylinders for commercial usage would be quite low in the coming months," according to Platts Analytics.

"Indian LPG demand is expected to post a slower demand growth of 1.5% to 3.5% for 2020, compared with a 6.5% demand growth last year, Manish Sejwal, NGL analyst at Platts Analytics said.

CFR North Asia propane price slumped to a one-month low of $304.50/mt on June 12, as weak demand weighed on the market, but recovered to $329.50/mt on June 17. The price was last lower on May 13 at $293.50/mt.