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SunSirs: Energy, LPG Market (Shandong) Fluctuated greatly in April
May 08 2020 10:10:45SunSirs(Selena)

In April, the price of domestic LPG (Shandong) market changed too fast, showing a trend of ‘Up and down’. At the beginning of the month, the average price of the domestic LPG was 2,673.33 RMB/ ton, and at the end of the month, the average price was 2,823.33 RMB/ ton. The price rose 5.61% in the month, 36.70% lower than that of the same period last year. The largest earthquake amplitude in April was 22.19%, during which the fluctuation was large.

Analysis of Influencing Factors

International crude oil: In April, the international crude oil fell broadly, which depressed the LPG market. On April 9, the OPEC+ special meeting ended, and its production reduction volume was lower than the market expectation, and the oil price fell again; on April 14, the international oil price fell again, mainly because OPEC+ and other oil producing countries' production reduction agreement disappointed the market, the production reduction share was difficult to offset the decline of fuel demand caused by COVID-19, In Adddition, the U.S. crude oil inventory exceeded the expectation, which increased the market panic atmosphere; on April 20, Brent crude oil futures market continued its downward trend, and the price fell sharply. In May, the contract fell to a negative range, but in June, the negative value was the exception, not the normal state of the global crude oil market. Until April 23, WTI crude oil futures market in the United States rebounded, the price rose for two consecutive days, and Brent crude oil futures market price rose sharply, which is also the international original Oil rebounded for two consecutive days, with WTI up more than 40%, mainly due to the accelerated production reduction of oil producing countries and the geopolitical turmoil of peripheral factors.

Market: In April, LPG showed a trend of rising first and then falling, and the overall trend was still greatly affected by international crude oil. In the first half of the month, CP fell in the LPG civil market, but the decline was less than expected, which brought certain benefits to the market, and crude oil closed up. In addition, the demand for downstream storage and replenishment was relatively positive, the market atmosphere was good, the factory shipped smoothly, the inventory was ok, and the price was continuously increased. On April 12, driven by the sharp rise of propane in Shandong Province, the price of LPG rose sharply, only 15.21% in three days. However, the upward trend lacked substantial benefits, and then ushered in a rational decline.

In the second half of the month, the LPG civil market of liquefied gas fell mainly, propane fell sharply, the LPG market returned to rationality, and the price fell step-by-step. On April 14, international crude oil suffered another setback. On April 20, it continued its decline and fell sharply. The news weighed on the market mentality. The downstream mentality was cautious and wait-and-see. The manufacturer's shipment was blocked continuously, the inventory was increasing gradually, and the successive profits were used to stimulate the shipment. On April 23, under the favorable rebound of international crude oil, LPG market pushed up slightly, but on April 27, the global crude oil inventory remained high, the market was still worried that the reduction of production was not enough to offset the decline of demand, the international oil price fell sharply, and LPG followed the decline.

International market: Saudi Aramco May CP announced that propylene and butane both rose sharply. Propane rose to $340/ T, up $110/ T from March; butane rose to $340/ T, up $140/ T from March.

Market Forecast

In April, the terminal market basically recovered, and the demand for LPG increased compared with that of last month. Near the May Day holiday, the downstream did replenishment work before the festival. And the introduction of the broad rise of CP in May brings certain benefits to the market, which is expected to rise in the short term. But in the long run, as summer is coming and the temperature is rising gradually, LPG market is about to enter the traditional off-season. It is expected that the trend may fall.

 

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