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Iran's Dec LPG loadings remain subdued at a trickle due to US sanctions

Singapore — LPG loadings from Iran remained subdued in December following the re-imposition of US sanctions on November 4, with the preliminary shipping program showing three vessels due to lift cargoes, shipping and trade sources said this week.

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Three cargoes were also lifted last month, including the VLGCs Sea Dragon on board which Chinese trading firm Pacific Petrochemical lifted a 44,000 mt evenly split cargo from Iranian Gas Commercial Co., or IGCC. Another evenly split IGCC cargo was also lifted last month by Pacific Petrochemical at Assaluyeh aboard another vessel, updated shipping fixtures showed.

The third VLGC, Global Scorpio, was slated to have lifted in November a cargo comprising 16,000 mt of propane and 14,000 mt butane from Persian Gulf Petrochemical Industry Commercial Co., or PGPICC, at Assaluyeh, as well as a 13,000 mt propane lot at Bandar Imam Khomeini, shipping sources said. The vessel is currently in the Persian Gulf region, cFlow shows.

A trade source said two of those vessels, including the 49,996 Dwt Sea Dragon, are expected to return to Assaluyeh for H1 January liftings, after delivering cargoes to China. Sea Dragon arrived at the Fujian Regas terminal on December 18 and would then head for Shenzhen, according to cFlow, S&P Global Platts ship tracking software.

The December cargo fixtures include liftings by PGPICC aboard the Gas Commerce for a 12,000 mt propane lot at Bandar Imam Khomeini, as well as a mixed cargo at Assaluyeh comprising 21,000 mt of propane and 11,000 mt of butane, shipping sources said.

Other December shipments are aboard the Gas Courage, which is loading mixed cargoes from Bandar Imam Khomeini and Assaluyeh. Both VLGCs are also in the Persian Gulf region, cFlow showed.

A trade source said an Iranian fund management entity called SPII -- one of the commercial arms of SATA Holding, which is the Armed Forces Retirement Organization -- has also recently been selling LPG cargoes to Iranian trading firm Triliance. SATA has taken some shares in a petrochemical company and SPII acts as the financial coordinator for the transactions, the source said.

Another vessel expected to return to lift LPG in Iran is Gas Infinity, market sources said. This 44,652 mt VLGC, previously called Toyosu Maru, was hit by a blaze on December 14 involving a local pilot boat carrying supplies to the VLGC and transporting crew at the Batu Pahat Anchorage in the Malacca Straits.

Four crew members of the pilot boat and two from the VLGC suffered burns in the incident in southwest Malaysia, local port authorities said this week. The VLGC remained at Batu Pahat between December 15 and December 19 for investigations, according to authorities and cFlow.

Gas Infinity, owned by China's Kunlun Holding Co. Ltd., was managed and operated by Cosco Shipping Seaman Ship Management, according to S&P Global Platts Ocean Intelligence. It is now enroute to China after the incident, laden with a cargo from Iran, a trade source said.

Shipping sources said Gas Infinity had also shipped an Iranian cargo to China in July.

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SANCTIONS TAKE THEIR TOLL

Iranian LPG shipments have been declining for two straight months ahead of the sanctions.

In October, shipments fell to 370,400 mt from 524,000 mt in September, which was a drop from August volumes when loadings hit 568,000 mt -- the highest since previous Western sanctions for Iran's nuclear plan was removed in January 2016, fixtures from shipping sources showed.

A shipping source said the latest US action had slashed Iranian LPG shipping business by more than half, as the sanction impacted shippers, end-users and financial transactions.

Iranian shipments in the first 10 months of this year totaled 4.602 million mt, most of them headed to China, largely to meet growing demand for propane dehydrogenation, shipping sources said.

China imported about 2.02 million mt of LPG in October, the most in the past 17 months, up 38.6% versus September and 27.2% from a year ago, data from the General Administration of Customs showed, as household demand typically rises from October.

LPG imports from the UAE jumped 85% on month in October to 841,930 mt, the data showed. Industry sources said volumes from the UAE probably included cargoes from Iran as China has been the main buyer of LPG from Iran, but these were not reflected in China's public data.

Oriental Energy, one of the major LPG importers and operator of PDH plants in China, shipped in around 451,000 mt in October, up more than 32% from 341,000 mt in September, according to shipping fixtures from JLC, a Chinese information provider.

Oriental Energy plans to shut its PDH plant at Zhangjiagang in eastern Jiangsu province on December 24 for 30 days of maintenance, a company source said. This is expected to reduce its propane usage, as propylene production would drop by 54,000-55,000 mt.

The plant has the capacity to produce 660,000 mt/year of propylene and 500,000 mt/year of polypropylene, and uses 790,000 mt/year of propane as feedstock when operating at 100% of capacity.

--Ramthan Hussain, mohd.ramthan.hussain@spglobal.com

--Edited by Norazlina Juma'at, norazlina.jumaat@spglobal.com