Summary
Great strength continues in European propane, which pushed the Sep/Oct C3 NWE spread to $9.00/mt on 31 July from $4.50/mt on 25 July.
The Sep’24 US LST vs Far East propane (LST/FEI) arb has softened into July, falling to -$228/mt on 31 July from -$215/mt on 22 July.
Petchem demand has been strong, and strong naphtha prices have supported the international propane structure. There continues to be good support for butane across all regions.
Open interest in the LPG complex remains significantly elevated, particularly in the Q4’24 FEI, which is 93% above the 5-year average, and the M1 contract, 65% above the average. In contrast, European pronap interest has remained stable around 1.4mb, while FEI/MOPJ Sep’24 interest is exceptionally high, 92% above the 5-year average.
Freight prices have continued to decline this week, which lent support to the Saudi CP propane. The M1 BLPG1 (Saudi Arabia to Japan) softened further over the fortnight, declining from $56.00/mt on 16 July to $49.00/mt on 30 July.
The correlation between US LST propane and US butane has increased to 0.82, likely due to strong butane spreads. In Europe, the propane-naphtha correlation improved to 0.59 from -0.22, driven by strong petchem demand. Meanwhile, the FEI-MOPJ correlation has turned more negative at -0.27 from 0.03, though it remains weak.
