SunSirs: Energy, LPG Market is Soaring, A Turning Point or A Continuation?

Price Trend

From February 10 to 24, the trend of domestic LPG (Shandong) market continued to rise until February 26. On February 10, the average price of liquefied gas market was 3,500 RMB/ ton, and on February 24, the average price was 4,050 RMB/ ton, with an increase of 15.71% during the period. The price was 0.83% higher than that of the same period last year. Until February 26, the price decreased by 2.88%.

Analysis of Influencing Factors

Products: after the LPG market continues to rise, it falls back. As of February 26, the price of LPG from Sinopec Guangzhou Chemical Co., Ltd. was 4,080 RMB/ ton, that of Sinopec Jingmen Petrochemical Co., Ltd. was 4,600 RMB/ ton, that of Sinopec Shanghai Petrochemical Co., Ltd. was 4,120 RMB/ ton, that of Sinopec Qingdao Refining Chemical Co., Ltd. was 4,000 RMB/ ton, and that of Shandong Jincheng Petrochemical was 4,000 RMB/ ton. The LPG price of Chenghua Group was 4,000 RMB/ ton, and that of Sinopec Shijiazhuang refining and chemical company was 3,650 RMB/ ton. The price of Sinopec Luoyang Petrochemical LPG was 3,850 RMB/ ton.

The overall demand of LPG market is good, and the price keeps rising, with a large range in the period. In the early stage, due to the continuous upward trend of international crude oil, the market was significantly boosted and the price stopped falling. At present, the manufacturer's production reduction and shutdown have not been resumed, the market supply continues to run at a low level, and the transportation capacity gradually recovers. The downstream resumption of work has increased, the domestic demand has increased, and the downstream has started the stage replenishment. The manufacturer's shipment is continuous and smooth, the inventory is at a low level, and the mentality is relatively strong, which has opened up an upward mode for the originally low LPG market. Until Monday (February 24), LPG growth slowed down and the price recovered. As the downstream resumption of work has not yet fully recovered, with the completion of replenishment, the downstream successively delisted and consumed inventory, the market transaction atmosphere has turned weaker than that in the earlier stage, and the price fell on the 26th.

Saudi Aramco issued CP in February, with propane of $505/ ton, down $60/ ton compared with the previous month; butane of $545/ ton, down $45/ ton compared with the previous month.

Industry: according to the price monitoring of SunSirs, on February 26, 2020, the price of bulk commodities in the list of energy sector rose one commodity month on month, with coking coal (0.45%) rising. There were seven commodities falling on a month on month basis, with Brent crude oil (-3.62%), WTI crude oil (-2.97%) and LPG (-2.88%) as the top 3 products. The average price of this day was -0.93%.

Market Forecast

At present, although the downstream resumption of work has increased, it has not been fully restored. The downstream acceptance capacity is limited. After the periodic replenishment, the stock consumption is mainly due to delisting. The shipping atmosphere of the manufacturer is obviously weakened, and the price is reasonable to callback. It is predicted that the situation will not be improved significantly in the short term, and the manufacturer may still yield profits. However, in the long term, with the gradual consumption of downstream inventory, the domestic market recovers in an all-round way, the downstream purchase volume has increased, and the price still has the probability of rising.

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