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 2021, LPG Contract Price has increased by US$36.50/MT to US$ 656.50/MT, from US$ 620.00/MT last month.
International LPG Market Development
- Saudi Aramco set its August propane term Contract Price (CP) at $660/mt, up $40/mt from July and its butane CP set at $655/mt, up $35/mt versus last month. LPG in the Philippines is a combination of 30% propane and 70% butane.
- Demand for LPG by big consumers in Asia rebounded in June. Japan's total LPG demand rebounded 0.47% month on month to 856,000 mt, after two consecutive months of declines while China also had record high imports in June due to lower domestic production and increased demand in propane dehydrogenation (PDH) plants following the maintenance season.
- On supply, the Middle East has healthy supply. Saudi Aramco announced acceptances of August-lifting term cargo nominations without cuts or delays. This came after Abu Dhabi National Oil Company (ADNOC) and Qatar Petroleum (QP) had announced no cuts or delays as well, while Qatar Petroleum had also sold ample propane cargo for August loading.
- Ample supply followed the OPEC+ alliance agreement on July 18 to increase production quotas by 400,000 b/d each month starting in August, amounting to a 2 million b/d total increase by the end of the year. The group's supply management pact also extended through 2022.
- Reports also said that Asia remains a more attractive destination for US LPG due to the better netbacks compared with Europe. While volumes from the US to Europe were reportedly up month-on-month in July, amid strong demand from petrochemical crackers in Europe, the outlook for further arbitrage activity is declining in view of decreasing positive netbacks.
- Platts noted that the pick-up in Middle East and US loading activity has given further bounce in Very Large Gas Carriers (VLGC) rates towards $40/bbl.
Oil companies increased the price of LPG effective 01 August 2021 by P3.27 to P3.35/kg or about P36.00 to 37.00 per 11-kg cylinder. Auto LPG likewise increased by P1.85 to P1.87/liter.
As of 01 August 2021, household LPG in Metro Manila are estimated to range from P691.00 to P997.00 per 11-kilogram cylinder.
Shown below are the retail prices of 11 Kg. Household LPG
|April||501.00-770.00||-9.60 to -10.70|
Note: *Prices for August are estimates