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 indetermining/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 October 2021, LPG Contract Price has increased by US$131.50/MT to US$ 796.50/MT, from US$ 665.00/MT last month.
International LPG Market Development
- Saudi Aramco set its October propane Contract Price at $800/MT, up $135/MT from the September CP, and the butane CP at $795/MT, up $130/ MT above September.
- This is the fifth consecutive monthly increase in the CPs and the highest since July 2014 for the propane CP, when it was set at $820/mt, and since August 2014 for the butane CPs, when it was set at $800/mt, S&P Global Platts data noted.
- Healthy demand has driven up Asian LPG prices to more than seven -year high, reportedly the highest since level reached in August 2014.
- This month’s higher CPs are also in anticipation of winter heating demand in North Asia, and improving Chinese propane demand for Propane Dehydrogenation (PDH) plants in view of scheduled maintenance.
o Meteorological agencies of Japan and South Korea have forecast higherthan-average temperatures for October. Forecast bey ond of slightly belownormal temperatures throughout South Korea from mid -October is anticipated to raise concerns over demand and inventory, traders said.
o China's LPG imports increased 3.6% month on month to 2.13 million metric tons in August.
✓ Chinese LPG importers with large storage capacities, were said to have ramped up their imports in preparation for the winter supply.
✓ China's propane dehydrogenation plants had cut their operating rate to an average of 68% in August, down from 86% in July amid squeezing processing margins.
- Middle East term supply is meeting healthy Indian demand. Reports say, the country’s LPG imports jumped 20.72% month on month to 1.707 million metric tons in August as domestic production dropped to 87% during the month, from 91% in July, the lowest run rate so far in 2021.
- US-EIA data in week ending September 24 showed weak propane exports to lowest level since June 4.
o According to S&P Global Platts Analytics, 12 V LGCs were loaded from US ports in the week ended Sept. 24, reduced by two versus previous week. Ten were destined for Asia, with three bounds for Indonesia and two for South Korea.
The oil companies have notified for an increase of P7.40/kg, to be implemented on staggered basis. Effective October 01, the oil companies, except Liquigaz, notified to increase P4.00/kg and another P3.40/kg effective October 08. Liquigaz has a one-time increase of P7.40/kg, which is set to take effect today, 01 October 2021.
As of 01 October 2021, household LPG in Metro Manila are estimated to range from P824.00 to P1, 039.00 starting October 01 and may increase to about P861.00-P1, 076.00 effective October 08.
Shown below are the retail prices of 11 Kg. Household LPG
|April||501.00-770.00||-9.60 to -10.70|
|April||605.00-784.00||(3.27) - (3.30)|
|May||639.00-900.00||(3.15) - (3.20)|
Note: *Prices for October are estimates