Exclusive LPG Report: A reshaping of LPG trade flows by El Niño underway
Global LPG trade is increasingly being challenged by the effects of El Niño. A mild winter in Europe and East Asia as well as ongoing weakness in PDH margins is anticipated to limit the seasonal rise in LPG prices this winter.
Key report takeaways:
- Record-high US LPG supplies and robust Middle East exports have kept the market well supplied amid the summer demand lull, with muted PDH margins capping petrochemical feedstock demand globally
- Iran’s LPG exports to China remain strong, with the start of South Pars Phase 11 production likely to boost future exports
- El Niño is presenting challenges for the LPG trade on multiple fronts
- Drought at the Panama Canal has led to transit restrictions, which have caused a spike in canal waiting time and led to VLGC freight rates rallying, although rates have cooled in early October
- For the above mentioned reasons, the seasonal upsides on LPG FOB prices may be capped this winter unlike in previous years