Saudi Aramco has set its December Contract Price for propane at $445/mt, down $95/mt from the November CP, and its butane CP at $415/mt, down $110/mt from the November CP, the company said Thursday.
The December propane CP is within the middle range of traders' expectations, while the butane CP is lower than expected.
Traders had forecast Saudi Aramco to set the propane CP between as low as $430-$440/mt and as high as $450/mt, and butane between $20/mt and $25/mt below that.
Front-month December propane CP swaps closed at $440/mt and butane at $415/mt in Asia on Wednesday. On Thursday, the November propane CP swap was notionally valued at $435/mt and butane was valued $25/mt lower.
The December propane CP extended its decline after the November CP snapped the uptrend seen since the August CP, largely due to the weakening Brent crude oil futures.
While volumes from major Middle East producers such as Saudi Aramco, Qatar and Kuwait have been sufficient to fill Chinese demand caused by a gap in US supply following higher import tariffs, this was countered by the sharp fall in Iranian November-lifting shipments after recent US sanctions.
Early on Thursday, the January/February backwardation was notionally at $3/mt, from $2/mt on Wednesday.
Aramco had set the propane CP for December 2017 at $590/mt and butane CP at $570/mt, Platts data showed.
Aramco's CPs, which set the price of LPG lifted from the Saudi ports of Yanbu, Ras Tanura and Ju'aymah under term supply contracts, are closely watched by the market as they tend to set a base level for LPG pricing for most markets East of Suez.
