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 2021, LPG Contract Price has increased by US$45.50/MT to US$ 526.50/MT, from US$ 481.00/MT last month.
International LPG Market Development
- Saudi Aramco set its June propane term contract price (CP) at $530/mt,higher by $35/mt compared to May, while the butane CP was set at$525/mt, up $50/mt from May. The rise in June propane and butane CPs followed two consecutive months of declines.
The Philippine LPG is a combination of 30% propane and 70% butane.
- The demand for Middle East LPG cargoes in Asia reportedly helps support the CPs.
- Platts has stated that the healthy Middle Eastern supply, with major producers accepting June nominations without cuts or delays, help offset the relative shortfall of US LPG due to multiple cancellations of June-loading cargoes.
- It noted that the arbitrage economics were looking less favorable for trans-Atlantic cargoes, with a strengthening pull from Asia on US tons.
- Also, an earlier build-up in April and early May has yet to clear, withexcess tons still yet to be fully absorbed by the local market.
- Several countries in Asia had decreased LPG consumption in April and May.
In India, total imports in April were about 26.5% lower than March, the second decline in a row, after imports in March fell 11% from a five -month high in February, the PPAC data showed. Reduced imports in April were in line with India's lower LPG consumption, which fell 6.5% on the month to 2.11 million mt, reportedly the lowest in 10 months and extending a downtrend for the fourth consecutive month.
Platts said that while demand and imports for May and June are set to remain soft, they are expected to improve starting July to help shore up an inventory shortfall, and as states brace for reopening from lockdowns in some cities.
- April imports by South Korea were also down 2.6% year on year as demand eased, down for the third consecutive month to 9.29 million barrels in April, the country’s data showed.
- Meanwhile, China imported 2 million mt of LPG in April, up 21% year on year and up 19% from March, according to its General Administration of Customs data.
- Lower LPG supply from Chinese refineries due to maintenance encouraged domestic LPG terminals to increase imports to meet the supply gap.
The lower prices for April-delivery cargoes also supported higher imports in April, it noted.
Oil companies increased the price of LPG effective 01 June 2021 by P2.18 to P2.20/kg or about P38.72 to 40.48 per 11-kg cylinder. Auto LPG likewise increased by P1.25/liter.
As of 01 June 2021, household LPG in Metro Manila are estimated to range from P663.00 to P924.00 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 June are estimates