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 February 2022, LPG Contract Price has increased by US$56.00/MT to US$ 775.00 /MT, from US$ 719.00/MT last month.
International LPG Market Development1
- Saudi Aramco has set both propane and butane for February contract prices at $775/MT. Compared to January CPs, propane CP increased by $35/MT and butane also rose by $65/MT.
The February CPs were said to have been set at the middle range of term lifters' recommendations and marked a recovery after two months of falls th at had snapped six consecutive months of increases.
Platts noted that Asia is expected to be well supplied. Exports from major Middle East producers are expected to rise 6.6% year on year in 2022.
o The total exports from Qatar, the UAE, Saudi Arabia, Kuwait and Iran are estimated to rise to 38.9 million metric ton, from 36.5 million in 2021, of which Qatar's 2022 exports are expected to stay around 10 million metric ton, the UAE's rise to 9.9 million metric ton from 9.4 million metric ton in 2021, and Saudi Arabia's rise to around 8.6 million metric from 7 million metric ton.
o Most of the 2022 exports are committed under term supply contracts, though Qatar occasionally offers spot LPG.
- On demand, Asia's petrochemical makers were reportedly considering to use propane as alternate steam cracker feedstock amid the deepening discount of propane to naphtha, and as LPG is pressured by ample supply and a lull in Chinese and Indian demand.
o In recent years, Asian cracker operators likely turn to LPG as alternate feedstock even if the discount of propane to naphtha is not as sharp as $50/mt, or when LPG CP is 90% lower than naphtha, which has been the typical level deemed economically viable for the switch.
- The price of LPG is projected to rise from March as China returns from long holiday and Indian spot demand recovers; and as regional demand extends its projected growth and competes with rising consumption in Europe and Latin America for US cargoes.
Oil companies increased the price of LPG effective 01 February 2022 by P4.00 kg or about P44.00 per 11-kg cylinder. Auto LPG likewise increased by P2.23 to P2.24/liter.
As of 01 February 2022, household LPG in Metro Manila are estimated to range from P794.00 to P1,054.00 per 11-kilogram cylinder.
Shown below are the retail prices of 11 Kg. Household LPG
Note: *Prices for February 2022 are estimates
1 Platts news