SunSirs: Energy, LPG Market Fell 10.33% in a Single Day due to Negative Factors

Price Trend

After the Spring Festival holiday, the price adjustment of domestic LPG market (Shandong) is too fast, and the overall trend is declining. Especially after entering this week, the decline is larger. On March 15, the average price of domestic LPG market was 3,466.67 RMB/ ton, on March 19, the average price was 2,750 RMB/ ton, on March 19, the one-day decline was as high as 10.33%, the weekly price drop was 20.67%, and the price was 29.97% lower than the same period last year.

On March 16, U.S. WTI crude oil futures market fell sharply, falling below $30/ barrel again, with the main contract at $28.70/ barrel, down $3.03 (-9.55%). Brent crude oil futures market prices fell sharply, with the main contract at $31.69/ barrel, down $3.75 (-10.58%). The deterioration of the global epidemic of COVID-19 in recent days has intensified people's blockade measures against the government to curb the spread of COVID-19, which may lead to a sharp contraction of economic activities, and then aggravate the general concerns of market people about the global economic recession. On Monday, Saudi Arabia reiterated its production increase plan with a clear attitude, which made the market worse.

This week, affected by the decline of international crude oil, the civil market of LPG followed the decline. Most of the civil gas in Shandong market fell below the 3000 RMB/ ton, mark, and most of the civil gas markets in other parts of the country were on the edge of 3000 RMB/ ton,. At present, the market supply has increased compared with the previous stage, but the load reduction production is more, the domestic market is not fully opened, and the demand is limited, and the market is still in a situation of supply exceeding demand. The downstream market entry sentiment is not high, manufacturers’ shipping is not smooth, inventory pressure is large, and prices fall broadly.

Market Forecast

At present, the market as a whole is still in oversupply. In addition, the sharp decline of international crude oil has suppressed the market mentality. The downstream wait-and-see mood has increased and the enthusiasm for entering the market is not high. The manufacturer's delivery is not smooth, the inventory gradually increases, and the pressure is large. At present, the civil price of LPG has dropped to a low level, but the negative factors dominate and the resistance to price increase is large. The rebound in crude oil on the morning of March 20 may give some boost to the LPG market.

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