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 June 2022, LPG Contract Price has decreased by US$107.00/MT to US$ 750.00 /MT, from US$ 857.00/MT last month.
International LPG Market Development1
- Saudi Aramco set its June propane term contract price at $750 per metric ton (mt), down $100/mt from May, while June butane CP was also set at $750mt, down $110/mt from May, the company said May 31.
The June CPs marked the second consecutive decline after three straight monthly increases, signaling ample supply from the Middle East.
Asia's propane price has flipped to a premium against butane for the first time in five months in the week of May 23 as supplies of mixed cargoes from the Middle East continued to rise, while spot demand for mixed cargoes from India and Indonesia has yet to resurface, Platts said.
o India, the world's second- largest LPG consumer, is estimated with annual consumption growth of about 6%. Thus, more terminals are being built or expanded to accommodate the country’s mounting demand and imports.
o China's LPG imports fell 9.2% on the month and 1.6% on the year to 1.98 million mt in April due to higher import costs, though traders expect the lower prices to revive import demand.
- The mixed propane-butane supply from the Middle East to Asia has been boosted by several spot cargoes recently offered and sold by major producers. While term nominations for Saudi Aramco's June-loading cargoes were lower than 400,000 mt -- accepted without cuts or major delays -- traders expected more spot offers to be made, while Qatari and Abu Dhabi National Oil Company’s acceptances were also in line with nominations.
- Asia is also set to receive healthy volumes of an estimated 2.4 million mt from the US in June, up from around 2.2 million mt the month before, comprising 70% propane and 30% butane.
- .Estimate of US LPG exports to Europe jumped in May to 690,000 mt. About 389,000 mt headed for Northwest Europe while the remaining 301,000 mt headed to the Mediterranean Sea.
- However, demand for LPG in Europe is likely to decrease as summer weather reduced heating consumption.
Oil companies decreased the price of LPG effective 01 June 2022 by P5.80 kg to P5.91 kg or about P64.90-P65.01 per 11-kg cylinder. Auto LPG likewise decreased by P3.20-3.30/liter.
As of 01 June 2022, household LPG in Metro Manila are estimated to range from P879.20 to P1,107.09 per 11-kilogram cylinder.
Shown below are the retail prices of 11 Kg. Household LPG
Note: *Prices for June 2022 are estimates
1 Platts news