Stronger Asian demand for prompt propane cargoes to cover winter heating requirements is leading the Northwest European market higher, according to sources, as US Gulf Coast cargoes are being pulled into Asia instead of descending on NWE.
Regional European demand has been flat so far this year due to mild winter temperatures, while the steady flow of US-origin cargoes has been mostly placed into petrochemical systems at significant discounts to naphtha.
Recent rises in Asian buying are helping to divert cargoes there from the US, according to sources, helping to alleviate the supply pressure on NWE and thin the arrivals list.
Record exports of propane from existing and expanding terminals in the US have become a global market fundamental as the product makes inroads into international markets.
“It [Asia] is the driving force behind the whole [European] market…Barrels are still being pulled to the east as the east-west spread widens,” a source said. “It certainly is dragging the market up.”
Prices in the CIF NWE market, reflecting refrigerated cargoes over 20,000 mt have rebounded from a six-year low of $287/mt on January 14 to $328/mt Tuesday.
LPG exports from the US to NWE since the start of the year have fallen from the record highs of 2014. LPG cargoes that have, or are estimated to arrive in January totaled around 66,000 mt according to Platts cFlow vessel tracking software.
By comparison, arrivals in December last year were estimated at 125,000 mt. There is currently one vessel, the Venus Glory, en route to ARA for arrival in February.
The support in Europe was solely from the supply side, however, as the market was still “not too healthy” in terms of demand, sources said, and showing little sign of change in the short term.
– Platts.com
