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US LPG cargo loadings for Asia unaffected by Hurricane Ida: traders

Highlights

US' Aug LPG loadings for Asia seen holding at 3.7 mil mt

Sep US LPG loadings seen around 4 mil mt

Propane premium to butane narrows to $1/mt

LPG cargo loadings at the US Gulf Coast terminals were not disrupted, or delayed, by the Category 4 Hurricane Ida that made landfall on Aug. 29 with devastating force, but has since weakened to a tropical storm, traders in Asia and the US said Aug 30.

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They said the hurricane's landfall was well out of range of Houston/Mont Belvieu. Overall, US LPG cargo loadings bound for Asia in August are expected to hold at initial estimates of 3.7 million mt, while volumes due for loading in September are expected around 4 million mt.

Traders said there were no indications of cargo cancellations so far, as the arbitrage remained open with Asia prices staying on an uptrend.

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S&P Global Platts assessed CFR North Asia propane at $702/mt on Aug. 30, near a two-week high, having rebounded from one-month lows of $676.50/mt Aug. 24.

Platts assessed non-LST propane at $1.14/gal Aug. 30, down 25 points on the day, yet at the third-highest level year-to-date. Prior to Aug. 30, spot propane averaged $1.11/gal for August barrels, Platts data showed, with robust exports and strong crude futures lending support.

According to Energy Information Administration data total US propane exports climbed 25,000 b/d to 1.08 million b/d in the week ended Aug. 20, and have been above 1 million b/d for 11 consecutive weeks at an average of 1.23 million b/d.

Propane exports averaged 1.04 million b/d over the same 11-week period in 2020.

The US LPG cargo market has been quiet of late, with very few fixtures heard and freight rates were static. Houston-Chiba VLGC rates were heard at $84/mt Aug. 30, in line with the value for the past six trading sessions, signaling that Ida had no influence on pricing or liquidity.

"There has been no impact," a North Asian trade source said, when asked about any disruption caused by Hurricane Ida.

"I did not hear of any delays," an Asia-based Western trader said.

Asia well supplied

Steady US shipments would keep Asia amply supplied in September and October when they arrive, and in time to meet Chinese demand after propane dehydrogenation plants return from maintenance and high stockpiles start to be drawn down.

Wanhua Chemical's PDH plant is due to shut for 30-45 days' maintenance in September, while Oriental Energy will shut its two PDH plants and three polypropylene plants in Ningbo in August.

US flows would also help to meet propane demand from the start up of new PDH plants, such as Fujian Meide, Oriental Energy's Ningbo facility and Shandong Huifeng Haiyi Petrochemical, in first-half 2021. Jinneng Science and Technology is due to start up a PDH plant at Qingdao in Shandong province that requires 1.08 million mt/year of propane imports, while Henan Nanpu Technology is slated to start a PDH plant by year-end that will require almost 200,000 mt/year of propane feedstock.

Healthy propane availability to feed Chinese demand has also helped to narrow propane's premium to butane to $1/mt on Aug. 30, from as wide as $40/mt Jan. 10, Platts data showed.

The narrowing propane-butane premium was also helped by the recent recovery in Indian demand for mixed propane-butane cargoes for October delivery, ahead of the festival season and as the country gradually eased restrictions with the decline of new COVID-19 cases in most parts of India, except Kerala.

Concerns over LNG shipment delays

Concerns over Hurricane Ida prompted an official from Japan's Ministry of Economy, Trade and Industry to say on Aug. 30 that US LNG shipments from the Cameron and Freeport projects to Japan may see "some delays", but any possible delays would not have a "critical impact" on Japan.

Hurricane Ida knocked out power lines and submerged coastlines after making landfall and about 95% of the USGC's oil and gas production were shut in and many refineries and petrochemical plants were closed in advance of the major storm.

The US Bureau of Safety and Environmental Enforcement said Aug. 29 that 95.65% of the USGC's crude oil, or 1.741 million b/d, were already shut in, as well as 93.75% of the region's 2.2 Bcf/d of natural gas production. An estimated 288 offshore platforms were evacuated -- 51.4% of the USGC's total.

Initial forecasts called for a busy hurricane season in the gulf.