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.
16 October, 2023
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
