Falling oil prices drive down the price for LPG

Saudi Aramco is likely to reduce its August Contract Price for both propane and butane by as much as $35/mt due to crude prices dipping below $55/bbl (barrel) according to industry sources last Monday. Also influencing the outlook are surplus barrels in the Middle East region in combination with relatively high freight costs.

Rising freight costs increase pressure

High stocks in Japan and Korea and higher freight rates have forced sellers to offer discounts between $10 and $30/mt.

Saudi Aramco’s July CPs for propane and butane were $395/mt and $425/mt, respectively. Industry sources expect the August CP for propane to be set at $350-$370/mt, while butane is expected at $380-$400/mt, with the spread between propane and butane holding steady at $30-$35/mt sources said.

On Monday afternoon, propane August CP swaps were pegged at $360.25/mt, and butane remained at a $34/mt premium to propane.

Saudi Aramco is expected to release its August CP this week.

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