SunSirs: The Peak Season is coming, and "Roller Coaster" is Staged in the LPG Market

1. Price Trend

After September, the trend of domestic liquefied petroleum gas (LPG) market (Shandong) fluctuated and rose. On September 1, the average price of domestic LPG was 3,730 RMB/ ton, and on October 16, the average price was 3,973.33 RMB/ ton, with an increase of 6.52% during the period. Compared with the same period last year, the price dropped by 11.92%, mainly due to shocks, with an amplitude of 11.54%

2. Market Analysis

Entering the traditional sales peak season, the domestic LPG (Shandong) market trend is as rapid as "roller coaster". At the beginning of September, due to the slow improvement of terminal demand and limited consumption capacity, it was difficult for the market to get a substantial improvement. The inventory of manufacturers was more than the middle level. In addition, the international crude oil fell for two consecutive days in a week, affecting the market mentality. The Shandong market slightly gave way to profit delivery, and the market was mainly subject to narrow adjustment. In the middle of September, under the influence of Saudi Arabia incident, the international crude oil soared, and the international spot market rose. In this positive situation, the manufacturers pushed up the sentiment, which ushered in the first wave of rising market. From September 15 to 18, the growth rate was 9.12%, and the single day growth rate was more than 4%. However, the sharp rise will be accompanied by a sharp fall. After the Saudi incident, the international market has shown a downward trend, and the LPG market has gradually returned to rationality. And affected by the National Day holiday, the main refineries stock and clear inventory, continuous price reduction to stimulate downstream market procurement, the market fell.

With the continuous profits of the manufacturers, the downstream market stocked, refinery inventory reduction plan was basically completed. At the end of September, October CP issued a substantial increase, coupled with the devaluation of RMB, which significantly increased the cost of imported LPG, supported the domestic market and strengthened the mentality of the industry. After the holiday, with the liberation of transportation capacity and the opening of a new round of replenishment in the downstream, the manufacturer's shipment continued to be smooth and the inventory pressure was not great. Sinopec has raised its prices substantially, which has driven local enterprises to keep up with the rise. Moreover, the temperature has dropped after the holidays, and the terminal demand has gradually improved, which makes the market usher in the rising market again. However, with the price rising to a high level, the downstream acceptance capacity is limited, and the market transaction is obviously weakened. The inventory pressure in Shandong is relatively obvious, taking the lead in the delivery of profits. Other regions have no intention of falling under the support of the main high price.

Saudi Aramco October CP: propane prices are up, butane prices are up. Propane rose to $420 / ton, up $70 /ton from last month; butane $435 /ton, up $75 / ton from last month. The c.i.f. cost of long-term propane is about 3,737 RMB/ ton, and butane is about 3,854 RMB/ ton.

3. Market Forecast

SunSirs’ analysts believe that: the international crude oil performance after the National Day is weak, continued to fall. With the rise of LPG price, the trading in various markets shows signs of weakening. Shandong market continues to yield profits and the focus of transaction continues to move down. In terms of demand, the weather is gradually cooling down, the downstream replenishment cycle is shortened, and the market is still in the traditional peak season. At present, positive and negative factors are intertwined. A small consolidation is expected in the short term. The market trend in the early period of the peak season is as exciting as a roller coaster, but there is still the possibility of rising in the later period.

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