A total of six US Gulf Coast LPG cargoes, totaling over 3 million barrels, were canceled in February due to unfavorable price spreads, according to sources.
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The cargoes were canceled by Petredec, Gunvor, Vitol, Geogas and Trafigura. The last cancellation was for a cargo with a Tuesday-Wednesday laycan, a Gulf Coast shipping source said.
The very large gas carriers, which can carry roughly 550,000 barrels of LPG, were slated to load from Houston Ship Channel export facilities operated by Enterprise and Targa. The canceled volumes represent roughly 30% of the total monthly loading capacity at the two facilities.
The cancellations came amid a closed arbitrage for Gulf Coast shipments after the Gulf Coast basis spiked.
The Mont Belvieu, Texas, propane marker rose to over a five-year high on February 10 amid frigid temperatures and low stocks in much of the US.
In turn, the propane arbitrage out of the US sank below loading fees for many term lifters. Term loading fees average around 12-15 cents/gal, according to sources.
But the cancellations have provided much needed supplies to a tight US propane market.
On Wednesday, US Energy Information Administration data showed that Gulf Coast propane and propylene stocks fell roughly 100,000 barrels to 14.98 million barrels in the week that ended February 21.
The fall was the lowest of the winter and is the second straight week of smaller stock draws.
Wednesday's relatively small draw helped send Mont Belvieu prices lower with February product trading 4.75 cents under Tuesday's assessment at $1.1625/gal.
The lower Mont Belvieu basis over the past week has helped widen the propane arbitrage out of the US. On Tuesday, Platts assessed the FOB Houston propane cargo premium at 17 cents/gal, the highest since January 30.
Exports appear ready to return to normal in March as the propane shoulder season approaches, forcing propane into international markets as domestic demand wanes.