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 etermining/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 March 2022, LPG Contract Price has increased by US$137.50/MT to US$ 912.50 /MT, from US$ 775.00/MT last month.

International LPG Market Development¹

• Saudi Aramco set its March propane contract price at $895/mt, up $120/mt from February, and March butane CP at $920/mt, up $145/mt from February.

• The March propane CP was the highest since February 2014, when it was set at $970/mt, while the butane CP was also the highest since February 2014 at $970/mt, Platts data showed.

• On supply, reports showed that Saudi Aramco had announced a cut in butane volumes for March term acceptances, with some lifters heard given less or no butane, or have lifting delays. This is due to continued maintenance work on the jetty at the Yanbu lifting terminal on the Red Sea coast that is estimated to last through end-February or mid-March.

• With the tightness in Saudi butane supply, plus demand from India, South Korea,
  Indonesia and Thailand for butane or mixed cargoes, the butane prices have lifted above propane. On Feb. 24, March CP butane swap was indicated at $21/mt above propane swap, compared with parity when Saudi Aramco set the February term CPs both at $775/mt.

o India, one of the largest LPG importers, has reportedly resurfaced seeking spot LPG cargoes for H1 March deliveries to meet recovering demand and fill prompt shortfalls. The country’s Petroleum Planning and Analysis Cell data showed that imports in January fell 15.87% on the month to 1.394 million mt.

o India's LPG consumption has soared in recent years to 27.558 million mt in fiscal 2020-21 from 4.803 million mt in FY 1997-98. Indian imports were traditionally butane-heavy, though the LPG import ratio has largely evened out in recent years.

• US LPG exports were heading to Northwest Europe and Mediterranean at 655,000 mt so far in February.

o Arbitrage from the US had been strong as butane prices fell in the North American market as Platts quoted its source saying "US values look very cheap, so arbitrage volumes should flow right now”.

o The propane arbitrage from the US to Europe remains works easy as well. The main drivers behind the strong propane imports from the US are that European refineries are still using their LPG instead of natural gas due to the latter's high prices and because the naphtha market has been very strong that has boosted petrochemical demand for propane.

• Reports also disclosed that Polish, Czech and Slovakian buyers were heard looking for alternatives to Russian LPG supplies in the western markets following Russia's invasion of Ukraine.

o Buyers were said to have been researching alternative supplies despite the price difference of about $100/mt compared to product arriving from the East.

o LPG railcar exports from Russia and Kazakhstan, which are delivered via Belarus to Poland, have run as planned for February, but situation may change for March as further sanctions are imposed on Russia.

Domestic Prices      

Oil companies increased the price of LPG effective 01 March 2022 by P7.95 kg to P8.00 kg or about P87.45 per 11-kg cylinder. Auto LPG likewise increased by P4.44 to P4.45/liter.

As of 01 March 2022, household LPG in Metro Manila are estimated to range from P880.45 to P1,140.00 per 11-kilogram cylinder.

For more information, call the Department of Energy:
Pricing: 840-2187
LPG: 840-2130
Fuels: 840-5669
SMS: (0915) 4469421
Email: oilmonitor@doe.gov.ph
Website: www.doe.gov.ph

_______
¹ Platts news