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 an international price benchmark set at the beginning of each month by Saudi Arabia’s state-owned oil company Saudi Aramco
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 vary 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 very small versus the world demand.
For the month of March, LPG Contract Price decreased by US$41.50/MT to US$469.50/MT, from US$511/MT a month ago.
International LPG Market Development
- The March propane CP is below traders’ expectations of $485/MT, while the butane CP is within traders’ positions of $455-$475/MT.
- The region is well supplied with flagging demand. Saudi Aramco, Qatar Petroleum and Iran cargoes are adding supply to the region.
- However, demand is recovering, led by China. Cooler temperatures and a switch to using LPG from natural gas bolstered LPG imports since January. With China returning from the long Lunar New Year break and most PDH plants returning from maintenance in March, LPG demand is expected to gradually recover as seen in the Asia spot market, Platts noted.
- Demand from Japan remained weak even during winter, but Asia is seeing growing demand from Indonesia and India.
- Soft LPG prices have kept propane and butane at steep discounts to naphtha since mid-2017, encouraging more North Asian petrochemical makers to switch to LPG as alternate feedstock.
LPG players implemented a price rollback, starting 01 March 2018, by P1.65 to P2.00 per kilogram or about P18.00-P22.00 per 11-kg cylinder.
As of 06 February 2018, household LPG in Metro Manila ranges from P517.00 to P742.00 per 11-kilogram cylinder.