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Iran LPG exports to reach around 450,000 mt in Oct, rebound in Nov: sources

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Iran LPG exports to reach around 450,000 mt in Oct, rebound in Nov: sources

Highlights

LPG Exports in September seen at 556,000 mt

Steady exports seen from Middle East producers

Concerns over Western gas supply as winter looms

Iran's LPG shipments are set to reach around 440,000-450,000 mt in October compared with 556,000 mt exported in September, largely to Asia, and are expected to rebound in November,

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trade sources said.

Exports up to Oct. 13 were around 220,000 mt, the sources added.

"The export volume in October will be lower in comparison to September. The export volume is fluctuating between 450,000 mt/month and 530,000 mt/month," a trade source told S&P Global Platts.

"November will be estimated to be the same as September in case we don't face shutdowns."

Iran's LPG exports were hovering near two-year highs at around 500,000 mt/month since July-August and rose further in September. This, together with volumes in October and November, would help to meet recovering Chinese demand, as more propane dehydrogenation plants return from maintenance.

Yantai Wanhua Chemical restarted the 750,000 mt/year PDH plant Oct. 13, a company source said, after shutting it Sept. 10 for 40 days.

Fuji Petrochemical, a subsidiary of Oriental Energy, resumed operations of its PDH plant in eastern Zhejiang province around mid September following maintenance since early August.

LPG prices in Asia have been rallying, as heating demand picked up ahead of the Northern hemisphere winter and concerns arose over global gas supply, with CFR North Asia propane rising to $910/mt Oct. 6, the highest since July 2, 2014, when it reached $918/mt, Platts data showed. It eased to $870.5/mt Oct. 15, as the market took occasional pauses and sellers emerged amid favorable prices.

Robust Asian market sentiment, led by Chinese demand for feedstock as new PDH plants come onstream, has also been pushing up the monthly Saudi term contract prices.

Saudi Aramco's October term propane CP was set at $800/mt, the fifth-straight monthly increase and highest since July 2014, and the butane CP was at $795/mt, the highest since August 2014, Platts data showed.

The upcoming November term propane and butane CPs are expected to rise for the sixth month in a row, trade sources said, as the November propane CP swap was notionally indicated Oct. 15 at $845/mt, up from $840.5/mt valued in the previous session, while butane was indicated $25/mt below propane.

Price advantage

Chinese sources have said more Iranian LPG was shipped to China this year due to the grade's competitive price.

Iranian LPG was heard sold at discounts steeper than $20/mt, or even $30/mt, compared with other Middle Eastern cargoes, trade sources said.

The previous round of Western sanctions in 2012 saw Chinese importers buying Iranian cargoes at around $40-$50/mt discounts.

Negotiations over Iran's nuclear program stalled since mid June following a pause for the Iranian elections. US President Joe Biden tried to revive the talks Sept. 21 by promising in his first address to the UN General Assembly that Washington would return to full compliance with the Joint Comprehensive Plan of Action if Tehran did the same.

Iran's foreign ministry spokesman said Tehran was prepared to resume talks.

Platts Analytics has cautioned that by mid 2022, OPEC+ spare capacity "will be insufficient to offset a no-Iran deal." Without the 1.5 million b/d of additional Iranian crude hitting the market, and with US supply growth still likely to be somewhat constrained by capital discipline, the oil market could be vulnerable to further disruptions, according to Platts Analytics.

Recent LPG supply from other major Middle Eastern producers has been steady.

Abu Dhabi National Oil Co. or ADNOC, announced acceptances of November-loading term LPG cargoes without cuts, delays or advancements, market sources said.

ADNOC's acceptances of September, August, July, June and April-loading cargoes had also been in line with lifters' nominations, Platts reported earlier.

Qatar Petroleum also announced acceptances of November-loading term cargo nominations without cuts or delays, with at least one lifter given advance loading of one week, traders said.

Saudi Aramco's acceptances of November-loading term cargo nominations are due by the weekend, after Aramco's acceptances of October-loading term cargo nominations saw no cuts and delays. The company was heard to have asked one major Japanese lifter to change the ratio of its October-lifting program to be more butane-rich, sources said.

At the Oct. 4 meeting, OPEC and its allies kept to their original plan to raise oil production in November by just 400,000 b/d.

Following this, Aramco allocated full-term crude volumes to most Asia-Pacific refiners, with some seeking incremental volumes to capitalize on recent sharp cuts in official selling prices.

This development and traders' comments that Aramco has two to three spot FOB cargoes to offer, probably for November loading, indicated that Aramco could meet lifters' nominations of November term cargoes, sources said.

Western markets

Total US propane exports posted a second-straight increase in the week ended Oct. 8, up 120,000 b/d to 1.37 million b/d, marking a five-week high and the fifth-highest weekly total in H2 2021. However,

propane production, product supplied and stocks all declined week on week, keeping global markets concerned over US supply ahead of the winter.

Propane production fell 37,000 b/d to 2.31 million b/d to stay above 2.30 million b/d for the eleventh time in 14 weeks, Energy Information Administration data showed Oct. 14.

In Europe, supply at refineries has been lower due to high natural gas prices, limiting propane offered on the spot market, while inland demand is growing as temperatures start to fall. This led to FOB propane barges in the Amsterdam-Rotterdam-Antwerp region reaching their highest value versus CIF large cargoes in over eight years in the week of Oct. 15, Platts data showed.