The May propane CP was $610/mt, down $5/mt MOM. At the
same time, the May butane CP was $590/mt, down $15/mt MOM.
International LPG prices exhibited
significant volatility in April, with marked differences between the first and
second halves. This divergence primarily stemmed from the reciprocal tariff
policy announced on April 4, which triggered an immediate global price plunge.
Given that 60% of China’s LPG imports originate from the U.S., market
participants grew concerned about future demand. Following the policy
announcement, international markets underwent broad corrections, with the FEI
crashing below $400/mt. As market sentiment evolved and trading activity
intensified, Chinese traders pivoted to Middle Eastern suppliers, driving up CP
expectations and premiums. However, the FEI and MB prices remained subdued. By
late April, persistently high FOB Middle East pushed MB prices upward. As of the
end of April, assessments for second-half May cargoes indicate CFR reaching
$640-650/mt.
In April 2025, China’s LPG import
arbitrage remained positive but the LPG deep-processing profits underperformed.
Influenced by the tariff escalation, selling prices of imported LPG rose
notably, and those in some regions saw increments of RMB 500-600/mt.
Accordingly, China’s LPG import arbitrage once reached RMB 600/mt. Given the
favorable import arbitrage and high import arrivals, sellers cut selling prices
to promote sales. Therefore, selling prices of imported LPG went down, and
China’s LPG import arbitrage declined to about RMB 100/mt. As for the LPG
deep-processing profit, the PDH unit profits dropped by about RMB 297/mt MOM. The
international LPG prices went down and then rose rapidly, so China’s propane
import costs went up. Meanwhile, China’s propylene market underperformed, as the
overall propylene supply was ample.
Forecast: It is estimated that the June CP may go
down. The May CP exceeded market expectations, resulting in prohibitively high
procurement costs and dampening traders’ procurement enthusiasm. Additionally,
significant adjustment potential in international supply and China’s LPG
deep-processing demand may foster cautious trading sentiment. Considering the
evolving supply-demand dynamics and lack of supportive market drivers, SCI
anticipates a downward adjustment in June CP.