Asian buyers expect Saudi Aramco to keep Aug term LPG CPs steady from July

Asian buyers and market participants expect Saudi Aramco to announce term contract prices for LPG loading in August at $585/mt for propane and $565/mt for butane, unchanged from the July CPs, on the back of tight availability following the OPEC+ decision to cut crude production.

A year earlier, Saudi Aramco’s term CP for August-loading LPG was $470/mt for propane and $502/mt for butane.

“Should be the same as last month,” a market source said, when asked about his expectations for Saudi Aramco’s CP for August-loading LPG but declined to provide a reason.

Another industry source, who expects the Saudi Aramco CP for August to be little changed from July, said that this was due to short supply.

“[The Middle East] is tight [on LPG] … [due to] crude cuts,” the source said.

On July 24, Iraq, Russia and Kazakhstan, the OPEC+ alliance’s biggest overproducers, agreed to gradually reduce production by a collective 2.284 million b/d between now and September 2025, OPEC said in a statement.

The producer group said Iraq, Russia and Kazakhstan had produced above their output targets by 1.184 million b/d, 480,000 b/d and 620,000 b/d, respectively, during the first six months of 2024, according to assessments by secondary sources, which include the Platts OPEC+ Survey from S&P Global Commodity Insights.

OPEC and its Russia-led allies are engaged in a series of overlapping production cuts amounting to around 5.8 million b/d of crude.

Platts, part of Commodity Insights, assessed FOB AG propane at an average of $582.55/mt over July 1-26, up from an average of $566.76/mt in June, Commodity Insights data showed, while FOB AG butane was assessed at an average of $568.475/mt over July 1-26, up from an average of $544.89/mt in June.

Lack of spot offers, freight slumps in July
The absence of spot LPG offers from Middle East producers like Saudi Aramco, Kuwait Petroleum Corp. and Abu Dhabi National Oil Co. was reflected in the sharp decline in the key Persian Gulf-Japan route for LPG cargoes.

An industry source based in the Middle East said he was aware of at least one producer in the region that will not offer any spot LPG cargoes in August. However, he declined to provide details or the reason for this decision.

“I do not know if there is any other deal done as [Middle East] suppliers’ inventory are all very tight,” another market source based in the region said.

Platts assessed the Persian Gulf-Japan route for Very Large Gas Carriers transporting 44,000 mt of LPG at a five-month low of $50.50/mt on July 23, halting a decline that began June 26 when it was assessed at $71.50/mt. The route was last assessed lower at $49/mt on Feb. 13.

The rate on the Persian Gulf-Japan route has been trending higher as more shipping fixtures have been observed, with as many as 13 VLGCs on subjects or fixed for loading in July. Most of these carriers are taking cargoes from the Middle East and heading east or for India.
Source: Platts