A combination of weak demand and expectations of lower import prices had weighed down on LPG spot prices in southern and eastern China over the week, domestic traders said Wednesday.
Spot prices of imported LPG truck cargoes, including propane, butane and 50:50 split cargoes, were heard traded at around Yuan 6,450-6,550/mt ($1,056-1,072/mt) in southern China's Pearl River Delta Wednesday, down by around Yuan 400/mt from Yuan 6,850-6,950/mt prior to the week-long Lunar New Year holidays that started January 31, local traders said.
In addition, spot prices of the same grades were said to have traded at around Yuan 6,600-6,700/mt in eastern China's Yangtze River Delta Wednesday, down by about Yuan 100-150/mt from Yuan 6,750-6,800/mt two weeks ago, according to local traders.
"Most factories are still shut for the Lunar New Year holidays ... they are not expected to resume operations before the Lantern Festival (February 14)," a trader in the Pearl River Delta said, adding that this has resulted in poor demand in the market.
Adding to this, the plunge in international LPG prices over the two weeks had also pulled domestic spot LPG prices lower, traders noted.
Prices of propane and butane cargoes for delivery along the Singapore-Japan route 30-45 days forward were both assessed at $906/mt Tuesday, down $104/mt and $99/mt respectively, or 10%, from $1,010/mt and $1,005/mt on January 28, Platts data shows.
"Lower LPG trading prices in the international market had dampened domestic buying interest for imported cargoes over the past two weeks, as buyers expected lower import costs as well as lower spot prices in the domestic market," another trader in the Pearl River Delta said.
"The import cost for March-delivery LPG cargoes is estimated at around Yuan 6,300/mt on an CFR South China basis based on the LPG values seen in the international market recently, which is still lower than the spot price of imported LPG in the region," the trader added.
Other traders however, said that domestic LPG prices will bottom out this week as factories are expected to resume operations gradually from next week, so demand for both imported and domestic-grade LPG will rebound soon. REFINERIES LOWER PRICES TO CLEAR INVENTORIES
Prices of domestic-grade LPG also fell substantially this week, compared with levels seen prior to the Lunar New Year holidays, as many refineries cut their prices in a bid to reduce inventories, traders said.
In the Pearl River Delta, Sinopec Guangzhou refinery sold its domestic-grade LPG at around Yuan 6,100/mt Wednesday, down by about Yuan 700-800/mt, or 11%, from Yuan 6,800-6,900/mt seen two weeks ago.
"Sinopec Guangzhou refinery's LPG inventory has been very high since last week, which forced them to slash the price this week," said a local trader.
In eastern China's Shanghai, Sinopec Gaoqiao refinery sold its domestic-grade LPG at around Yuan 6,300/mt Wednesday, down by around Yuan 300/mt from Yuan 6,600/mt prior to the Lunar New Year holidays, according to a local trader.
"Domestic refineries usually cut LPG prices after a long holiday in a bid to ease inventory pressure, as their LPG productions are normal while demand is thin during the holiday," the trader noted.
"The situation is expected to improve from next week as more and more factories will be back to normal operations. And domestic refineries' maintenance season will start from March, when supply for domestic-grade LPG is expected to reduce then," the trader added.
