LPG Contract Price (CP)
LPG Contract Price (CP), commonly called the “Saudi CP” is the primary driver of LPG pricing in the Far East including the Philippines. It is the international price benchmark set at the beginning of each month by Saudi Arabia’s state - owned oil company Saudi Aramco.
Aramco's CPs, which set the price of LPG lifted from the Saudi ports Yanbu, Ras Tanura and Ju'aymah under term supply contracts, are closely watched by the market as they tend to set a base level for LPG pricing for most markets East of Suez.
The DOE refer to the LPG/Saudi CP and forex monthly average changes in determining/monitoring the price adjustments of LPG in the domestic market. Following the timing of the monthly changes in CP, domestic price of LPG also varies every first day of the month and remain constant throughout the whole month.
Like all other petroleum products, the Philippines has no influence over the LPG CP as the country’s domestic requirement is small versus the world demand.
For the month of August 2022, LPG Contract Price has decreased by US$62.00/MT to US$ 663.00 /MT, from US$ 725.00/MT last month.
International LPG Market Development1
- Saudi Aramco set its August propane and butane term contract price at $663/MT, down by $62 per metric ton from July.
This month’s propane and butane prices Contract Prices are lower than in July that were both set at US$725/MT. The August CPs marked the fourth-straight fall, following three monthly increases in a row.
Platts reported of more diverse supply sources of consumers in Asia as healthy volumes of LPG and naphtha from Algeria are heading East on expectations of better arbitrage2 margins as trading activity in the Mediterranean is limited during the summer.
o About 260,000 mt of LPG were exported from the Mediterranean to Asia in July, with 229,000 metric tons (mt) destined for Southeast and Eastern Asia, according to Kpler data.
o All of the 229,000 mt was exported from Algeria during the month, and they represent the highest volumes from the Mediterranean to Asia seen by Kpler since it began reporting the data in 2014.
o Algerian LPG exports to Southeast and Eastern Asia have been steadily increasing since the start of 2022, when 42,000 mt was recorded in January.
o One major Chinese petrochemical maker -- Wanhua Chemical was heard to have recently started importing LPG from Algeria, trade sources said.
o Algerian LPG quality is largely similar to those from the Middle East and the US and the price is based on the Sonatrach Contract Prices. Algeria's state-run Sonatrach is heard to have been able to sell a 44,000-mt evenly split cargo for loading over the last 10 days of August, an Asian market source said.
- Exporters reportedly hope the Eastern market would help absorb some surplus from the Mediterranean during the seasonal lull, even as Asia continued to attract ample LPG supply from the Middle East, US and occasionally West Africa.
- On the other hand, supply from Saudi Aramco stays healthy while importers keep to term imports. Saudi Aramco's monthly term supply to Asia is estimated at around 500,000 metric tons, while its trading arm, Aramco Trading Co. (ATC), has been regularly offering up to three to four monthly cargoes in recent months, adding to supply in the market, Platts said.
o India and Indonesia are the two major consumers of household cooking gas in the region. They normally buy mixed propane-butane cargoes and have been taking higher volumes of term cargoes from producers and traders.
Oil companies decreased the price of LPG effective 01 August 2022 by P1.70/kg to P2.09/kg or about P10.34-P14.63 per 11-kg cylinder. Auto LPG likewise decreased by P1.15/liter.
As of 01 August 2022, household LPG in Metro Manila are estimated to range from P838.00 to P1,024.00 per 11-kilogram cylinder..
Shown below are the retail prices of 11 Kg. Household LPG
Note: *Prices for August 2022 are estimates
1 Platts news
2 Arbitrage is an investment strategy in which an investor simultaneously buys and sells an asset in different markets to take advantage of a price difference and generate a profit