China wholesale LPG prices have surged across the country this month, bolstered by strong international prices and rising domestic demand.
The Pearl River Delta Index (PRD) assessment hit a record high of 4,251 yuan/t ($650/t) on 23 December, up by 20.3pc from the start of this month. The PRD index, which reflects the price of LPG imported to south China's wholesale market, was launched on 1 April.
East China terminal prices have also risen, gaining by 22.5pc to Yn4,150-4,300/t over the same period.
The propane Argus Far East Index (AFEI) — the value for 23,000t cargoes delivered to northeast Asia — rose to $585.50/t on 23 December, up by 16pc from 1 December. A combination of seasonal demand and strong long-haul freight rates, which have been boosted by weather-related delays and congestion at the Panama Canal, have sent the AFEI higher. The strong AFEI values have prompted China's import terminals to raise domestic wholesale prices amid recovering seasonal demand.
China's domestic LPG prices have also found support from a surge in prices of rival fuel natural gas. The ANEA, the Argus assessment for spot LNG deliveries to northeast Asia price, was assessed at $13.37/mn Btu on 23 December, 68.4pc higher than on 1 December. Tight global LNG supplies and strong domestic power consumption because of a cold snap in China have led to power supply shortages and a surge in domestic natural gas prices, which in turn have boosted LPG demand.
Most ceramic factories in south China that have a choice of using LPG and natural gas have switched to cheaper LPG, an importer in the Chaoshan area said. An official at a refinery in Fujian province said more LPG was being kept for system use because of high natural gas costs.
Factories in Shanghai and the provinces of Zhejiang and Jiangsu are unable to switch to LPG from natural gas because of limited flexibility in the pipeline infrastructure, meaning there has been no immediate impact on the region's LPG demand. But high natural gas prices are expected to boost LPG demand, an east China importer said. Refineries in east China are increasingly looking switch to LPG, an official at a refinery in the region said.
