SunSirs: Domestic Liquefied Petroleum Gas (LPG) Market Fell Sharply (9.23-9.30)

1. Price Trend

In the last week of September, the domestic LPG (Shandong) market shocked and fell. On September 23, the average price of LPG was 3,833.33 RMB/ton, and on September 30, it was 3,760 RMB/ton. Within a week, the price fell by 1.91%, 23.98% compared with the same period last year.

2. Analysis of Influencing Factors

Products: In the last week of September, the domestic liquefied petroleum gas market was weak, and the trading atmosphere was general. As of September 30, the ex-factory price of LPG of Sinopec Guangzhou Chemical Co., Ltd. was 3,620 RMB/ton, that of Jingmen Petrochemical Co., Ltd. was 3,750 RMB/ton, that of Shanghai Petrochemical Co., Ltd. was 3,700 RMB/ton, that of Qingdao Petrochemical Co., Ltd. was 3,700 RMB/ton, and that of Shandong Jincheng Petrochemical Group was 3,780 RMB/ton. The ex-factory price of LPG of Sinopec Shijiazhuang Refining and Chemical Company was 3,650 RMB/ton, and that of Luoyang Petrochemical Company was 3,800 RMB/ton.

Industry chain: In the last week of September, the DME market first fell and then rose. The average market price of DME on September 23 was 3,070 RMB/ton, and on September 30 it was 3,320 RMB/ton. Within a week, the price of dimethyl ether rose by 8.14%, which was 31.9% lower than that of the same period last year. At the same time, the propane market fell first and then rose. The average market price of propane on September 23 was 3,912.5 RMB/ton, and on September 30 it was 3,925 RMB/ton. Within a week, the price rose by 0.32%, which was 29.52% lower than that of the same period last year. In the last week of September, the liquefied petroleum gas (LPG) market (Shandong) fell slightly, and the international crude oil rose sharply and then fell. It was bad for the market. The downstream market was mainly cautious, and the enthusiasm for entering the market was not good. Manufacturer's shipment was continuously blocked and inventory pressure was increasing. Although pre-season inventory demand was increasing, manufacturers mainly cleared inventory, made small profit and lowered prices.

Saudi Aramco announced the October CP, propane and butane prices rose. Propane rose to $420 per ton, up $70 a ton from last month, and butane to $435 per ton, up $75 a ton from last month. The cost of long-term approximate cargo propane converted to onshore is around 3,737 RMB/ton and that of butane 3,854 RMB/ton.

Industry: According to the price monitoring of SunSirs, in the 38th week of 2019 (9.23-9.27), there were four kinds of commodities rising annually in the energy sector, one of which rose more than 5%, accounting for 6.3% of the monitored commodities in the sector; the first three commodities were dimethyl ether (5.37%), methanol (4.74%) and asphalt (1.48%). There were nine kinds of commodities that declined annually. The first three products were liquefied natural gas (-3.12%), WTI crude oil (-2.89%) and Brent crude oil (-2.40%). Average gains and losses that week were -0.29%.

3. Market Forecast

SunSirs’ LPG analyst believes that the inventory is in a controllable state at present as the manufacturer delivers the goods at a profit. With the cooling of the weather after the festival, the demand for terminals has increased. In addition, the sharp rise of CPs in October supported the market mentality, and there was limited room for cost-supported declines. It is expected that CPs will rise steadily later on.

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