Exclusive LPG Report: LPG summer trends – What’s different this year?
Rising US LPG production is outpacing domestic and exports demand in Asia and Europe. The outlook on Middle East exports has turned into a wildcard amid uncertainty around the extent of OPEC’s production cuts. With petrochemical margins remaining challenged, global LPG demand is projected to stay subdued through Q3, effectively capping LPG tanker freight rates.
02 June, 2023
Key report takeaways:
- US LPG exports remain at multi-year highs but have been unable to curb a growing surplus weighing heavily on domestic prices
- Middle East exports have surprised on the upside in May, but supplies could fall in the coming weeks. Ample supplies from the US should keep prices subdued
- In Asia, China displayed voracious import appetite in April/ May, which is likely to slow in the near-term as temporary support factors fade. In contrast, South Korea and Japan’s LPG imports fell drastically in the same period but are likely to rebound
- Europe’s LPG imports have rebounded from Feb/Mar lows, but are likely to remain rangebound amid sluggish industrial demand and petchem margins
- Soaring US and Middle East LPG exports have boosted VLGC tonne-mile demand and tighter tonnage availability in the weeks ahead is pushing VLGC rates higher. But the sustainability of this rally remains in question, especially if arbitrage economics are negatively affected by soaring freight rates
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