Price trend

According to the Commodity Market Analysis System of SunSirs, the price of civilian LPG in Shandong has been declining since May. From May 1st to May 15th, the price of civilian LPG in Shandong dropped from 5,126 RMB/ton to 4,398 RMB/ton, a decrease of 14.2% during the cycle.

From the weekly K-column curve of LPG, it can be seen that LPG has been declining for several consecutive weeks recently, and the decline gradually deepened in May. As of May 15th, the maximum weekly decline was 6.75%.

Analysis review

In terms of supply, after the May Day holiday, refinery maintenance increased relatively, and the supply remained low, but the supply of overseas goods was abundant. The shipments in the Middle East and North America in May were both at a high level. The weakness of the external market suppressed the domestic market through the high arrival volume and depressed the domestic LPG market price.

In terms of demand, as we enter the second quarter, the temperature gradually increases, and the civilian LPG market gradually enters a low demand season from south to north. Although the tourism industry was booming during the May Day holiday, with an increase in commercial demand for LPG, the impact on the LPG market was limited, and the market quickly declined after the holiday. In terms of chemical industry, the downstream PDH operating rate remained at around 70%, with seasonal pressure on spot goods. The demand of the chemical industry was average, and some chemical product profits were shrinking. Enterprises were reducing their operations and purchasing.

In terms of futures, the LPG futures market was fluctuating and declining recently. The rebound resistance of crude oil prices was relatively high, and their driving effect on the LPG market was limited. At the same time, restricted by the spot market of LPG, the futures market was weak and declining. At 9:43 on May 15th, the main contract for LPG futures was quoted at 4096 RMB/ton, a decrease of 2.96%, reaching a new low of 4,092 RMB/ton since early June 2021. The LPG market was in a bottoming stage and lacked upward momentum.

Market outlook

Overall, the overall trading atmosphere in the LPG market was not good, demand was weak and difficult to improve. There was a strong wait-and-see atmosphere in the market, upstream sales were not smooth, and inventory in the region was gradually accumulating. It is expected that in the short term, Shandong's civilian LPG market will be difficult to be optimistic, and continue its downward trend.

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