Argus International LPG

Daily international LPG prices and market commentary

Issue 18-22  |  Wednesday 31 January 2018

Overview Prices

Asia-Pacific: February CP at $525/$505. Key prices $/t

± Bid Ask ±
Europe: Propane cargo traded.
Propane cif ARA (large cargoes) +3 496 - 497 +3
North America: Propane weakened slightly.
Butane cif ARA (large cargoes) +2 481 - 490 +1
daf Brest propane 505 - 505
Propane: Mt Belvieu non-LST diff to cif ARA $/t daf Brest propane-butane mix -7 438 - 440 -6
Propane Argus Middle East Index 525.00 +10.00
-10 Butane Argus Middle East Index 505.00 +8.00
Propane Argus Far East Index™ (AFEI™) 544.75 +1.00
-20 Butane Argus Far East Index™ (AFEI™) 518.75 +7.00
Argus Mixed Index 531.75 +4.00
-30 Propane Argus South China Index 544.75 +1.00
Butane Argus South China Index 518.75 +7.00
-40 Propane Argus East China Index 544.75 +1.00
Butane Argus East China Index 518.75 +7.00
-50 Americas: Propane Mont Belvieu pipeline fob ¢/USG
VWA ± Low High ±
-60
Enterprise 85.672 -0.250 84.500 - 87.000 -0.250
LST 85.103 -0.625 83.750 - 86.750 +0.375
-70
fob USGC, diff to Mont Belvieu -0.500 4.000 - 5.500
USGC export fob $/t -2.6 449.2 - 457.0
-80
US propane del Japan (AUSJ) $/t -3.0 508.0 - 516.0
01 Aug 17 29 Sep 17 29 Nov 17 31 Jan 18 US propane del ARA (AUSE) $/t -3.0 478.0 - 486.0

International comparisons (Jan) $/t

Propane: ARA diff to Med, cif $/t
Propane Butane
-5
Argus North Sea Index™ (ANSI™) 537.0 492.5
Sonatrach fob Bethioua 550.0 530.0
Saudi Aramco 590.0 570.0
-10 KPC (Kuwait) 590.0 570.0
Argus Middle East netback 515.5 489.5
Regional assessments $/t
Propane Mt Belvieu NW Europe AFEI
-15
Physical spot 447.75 496.50 544.75
Feb 448.50 495.00 540.00
Mar 433.50 483.00 523.00
-20
Apr 417.25 469.00 508.00
Argus arbitrage $/t
Propane NWE diff to Mt Bel AFEI diff to Mt Bel AFEI diff to NWE
-25
Physical spot -48.75 -97.00 -48.25
07 Aug 17 04 Oct 17 30 Nov 17 31 Jan 18 Feb -46.50 -91.50 -45.00
Mar -49.50 -89.50 -40.00
Apr -51.75 -90.75 -39.00
CONTENTS Naphtha
± Bid Ask ±

Northwest Europe 2 cif northwest Europe +2.00 580.50 - 581.50 +2.00

Mediterranean, FSU 3 cif Mediterranean +2.00 571.50 - 572.50 +2.00
cfr Japan -1.25 585.50 - 587.00 -1.25
International swaps 5 fob Mideast Gulf -1.25 566.00 - 567.50 -1.25
Middle East 5 LPG freight $/t
Asia-Pacific 5 VLGC Mideast Gulf-Japan 29.3
VLGC Houston-Chiba 59.0
US Gulf exports 8
VLGC Houston-Flushing 29.0
US 8 1,800t Tees-Lisbon butane 93.5
Industry news 10 1,800t Tees-ARA 53.5

Copyright © 2018 Argus Media group

Argus International LPG Issue 18-22 | Wednesday 31 January 2018

NORTHWEST EUROPE Northwest Europe and Mediterranean $/t

± Bid Ask ±

Large cargo Propane

The ANSI for February is $470/t for propane and $474.5/t for cif ARA (large cargoes) +3 496 - 497 +3
butane, down by $67/t and $18/t, respectively. fob northwest Europe (small) +3 505 - 515 +3
The EIA weekly report showed that US propane stocks cif ARA (small) +3 538 - 548 +3
declined by 900,000 bl to 53.1mn bl, compared with market fob ARA (barge) +3 537 - 547 +3
expectations of a 2.5mn bl fall on average. Although smaller fca ARA (rail) +3 553 - 563 +3
than expected, the draw did not significantly weigh on the cif Mediterranean (large) +3 499 - 509 +3
value of propane now that the market in northwest Europe fob Mediterranean (small) 545 - 555
is looking fairly balanced for February. Expectations of sig- fca Mediterranean (rail) 520 - 530
nificant swings of supply or demand remain low and propane Propane averages (Jan) Price ±
prices steady compared with naphtha. cif ARA (large cargo) 519.409 -1.091
Following Tuesday’s deal, Gunvor was back to offer a ToT fob ARA barge 564.182 +0.137
cargo over 14-18 February delivery dates on the vessel BW Butane
Njord or substitute, starting at 50:50 $497:February cif ARA cif ARA (large cargoes) +2 481 - 490 +1

+$3/t. The offer was decreased twice to $496:February cif fob northwest Europe (small) +4 474 - 484 +4

ARA +$2/t where it was booked by Glencore just before the cif ARA (small) +7 500 - 510 +7

timestamp. With February cif ARA assessed at $495/t, the fob ARA (barge) +7 485 - 495 +7

deal was struck at $496.5/t, up by $3/t compared with the fca ARA (rail) +7 496 - 506 +7

previous deal agreed on Tuesday. Vitol bid again for deliv- cif Mediterranean (large) +1 507 - 517 +1

ery between 14-18 February at a fully fixed price of $495/t, fob Mediterranean (small) +4 570 - 580 +4

increased just once to $496/t cif Flushing. The trading firm Butane averages (Jan) Price ±

was joined by BP, which bid for the later dates of 16-20 Feb- cif ARA (large cargo) 501.159 -0.746

ruary delivery at 50:50 $492:February cif ARA -$5/t, reach- fob ARA barge 520.477 +0.318

ing $493:February cif ARA -$4/t at the timestamp, valued at Ice Brent futures settlement
Mar 69.05 +0.03
$492/t.
Apr 68.89 +0.37
No discussions were heard on butane following two days
May 68.57 +0.36
of Gunvor bidding. The value of large cargo butane remained
Competing fuels, 25 Jan Bid Ask ± 18 Jan
unchanged in the mid-80s as a percentage of naphtha on a
NWE small-scale LNG €/MWh 21.55 22.05 -0.41
delivered basis, and outright prices inched higher following
NWE small-scale LNG $/t propane equivalent 377.55 386.30 +0.81
naphtha.

Coasters
The northwest European butane coaster market was fairly Follow us on Twitter @ArgusMediaLPG
quiet with many market participants waiting for the for market insights from our editors.
February ANSI before settling transactions.
Lower butane prices have encouraged a number of
producers to retain the material for in-house petrochemi-
cal cracking, turning many vessels into temporary floating
ANNOUNCEMENT
storage. This has reduced the amount of available coasters
for cargo movements and increased logistical headaches
New ANSI freight for 2017-18
for other buyers and sellers. In addition to petrochemical
demand, gasoline blenders are also looking for material, Following consultation with the shipping industry the
freight rate used to calculate the Argus North Sea Index
and with less than ample availability, price discussions as a
(ANSI) for October 2017-September 2018 will be set at
percentage of naphtha inched higher. Delivered butane was
$17.50/t, down by $1.50/t compared with 2016-2017. The
talked in an 86-88pc range, pushing outright pricing back up
freight rate is based on a composite Contract of Af-
over the $500/t mark. There was also interest heard from freightment (COA) rate for a 20,000t cargo one load/two
the Mediterranean for fob tonnes, supporting an uptick of port discharge basis for routes Braefoot Bay, Karsto, or
discussions into an 82-83pc range. Outright fob pricing rose Mongstad terminals to Antwerp, Flushing, or Terneuzen.
by $4/t but is still well below the $500/t level.

Copyright © 2018 Argus Media group Page 2 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

ARA FSU/eastern Europe $/t

­± Bid Ask ±
With the February ANSI now available and lower than
January, many refineries will be able to work out their Daily

pricing for the month, which is expected to lead to more fob Black Sea propane-butane mix 505 - 525
fob Black Sea propane 505 - 525
concrete transactions.
fob Black Sea butane 500 - 520
February material changed hands during the session,
daf Brest propane-butane mix -7 438 - 440 -6
with one railcar deal reported at $555/t on an fca ARA basis, daf Brest propane-butane mix €/t -6 352 - 354 -5
$24/t below the last fca trade on 25 January. The material daf Brest propane 505 - 505
is loading next week and is moving to Germany. Despite this, daf Brest propane €/t -1 406 - 406 -1
overall demand in Germany remains relatively subdued as daf Brest differential to cif ARA (large) 8

the mild weather continues in the region. Barge and railcar daf Ukraine propane-butane mix +5 440 - 450
fot Burgas (Lukoil posted) propane-butane mix 616 +2
prices inched higher on lower availability and reflecting a
Argus Polish Domestic Index (APDI) 532 -5
more bullish wider market. While German refineries have
Weekly
sufficient material to meet contractual obligations in Febru- daf Bekabad propane-butane mix -20 410 - 435 -35
ary, it is not yet clear whether the supply is there if sus- daf Ukrainian-Romanian border propane-
-10 440 - 460 -10
tained cold weather arrives and spot demand climbs. butane mix

Butane barge price discussions crept higher on low avail-

ability, ranging between 86pc and 88pc against naphtha, and see buyers look to northwest Europe as well as the US
with some buyers looking to the coasters market for mate- for additional tonnes.
rial. Outright pricing rose by $7/t, underpinned by a climb in
physical naphtha. FSU

Reported done ($/t) The daf Brest assessment for LPG mix slipped as trading
496.50 cif Flushing (propane large cargo, 20,500t, delivery activity was low. Only two companies showed interest in
14-18 February) buying 700t of LPG mix at $435-438/t. A seller offered a
555 fca ARA (propane railcar, 450t, loading 5-9 February) 500t cargo at $446/t and by the end of the trading session
decreased the price several times to $440/t, but the cargo
Assessment rationale remained unsold. No activity was seen on the propane
Propane ARA large cargo (PA0000400) was assessed on the market as mild weather persists in Poland.
basis of transactions, bids and offers, as and when these are The Black Sea market remained muted during the last
identified in the market commentary, and other market day of the month as a decrease in Sonatrach prices for pro-
data, in accordance with the methodology. pane and butane is expected in February.
Daf Ukraine inched higher as buyers were ready to
Butane ARA/UK large cargo (PA0000360) was assessed on the confirm higher price levels due to a shortage of material.
basis of transactions, bids and offers, as and when these are Wholesale prices in Ukraine also firmed.
identified in the market commentary, and other market The daf Bekabad assessment for propane-butane mix
data, in accordance with the methodology. slipped amid faltering demand. According to traders, Tajik

MEDITERRANEAN Butane: AFEI diff to cif Med $/t

80

Although still unconfirmed at the end of the day, the

60
Sonatrach posted prices for February loading LPG were
widely believed to be $485/t for propane, down $75/t from 40
January, and $485/t for butane, off $45/t from January. The
fall in propane was $10/t more than the decrease in the 20
Saudi CP but not out of line with the anticipated decline.
0
The butane decrease was, also as expected, relatively more
temperate, though the equivalent ANSI value in northwest -20
Europe fell by much less from a lower starting point.
Colder than average temperatures are forecast across Eu- -40
rope and into north Africa, which could pique spot demand 02 Aug 17 03 Oct 17 30 Nov 17 31 Jan 18

Copyright © 2018 Argus Media group Page 3 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

LPG arbitrage $/t

Northwest Europe NWE differential to AFEI

Mt Bel differential to NWE
Physical spot 496.50 Physical spot -48.25
Physical spot -48.75
Feb 495.00 Feb -45.00
Feb -46.50
Mar 483.00 Mar -40.00
Mar -49.50
Apr 469.00 Apr -39.00
Apr -51.75

Mont Belvieu
AFEI
Physical spot 447.75
Physical spot 544.75
Feb 448.50
Feb 540.00
Mar 433.50
Mar 523.00
Apr 417.25
Apr 508.00

MT Bel differential to AFEI

Physical spot -97.00
Feb -91.50
Mar -89.50
Apr -90.75

International swap prices (4:30pm London) $/t

Mont
Propane Propane
Naphtha Propane AFEI™ less Belvieu propane Mont
Propane cif Propane Argus Far Mont AFEI™ less
northwest less propane cif less Belvieu less
ARA CP East Index Belvieu LST propane CP
Europe naphtha ARA Propane AFEI™
(AFEI)™ (¢/USG)
cif ARA

M1 differential
+1.50 0.00 +4.75 -
to physical

Feb 18 495.00 581.00 na 540.00 84.00 -86.00 +45.00 -56.27 -101.27 na

Mar 18 483.00 579.00 523.00 523.00 81.63 -96.00 +40.00 -56.68 -96.68 nc
Apr 18 469.00 577.00 505.00 508.00 78.63 -108.00 +39.00 -58.35 -97.35 +3.00
May 18 465.00 573.00 482.00 502.00 77.75 -108.00 +37.00 -58.92 -95.92 +20.00
Jun 18 463.00 570.00 487.00 499.00 77.63 -107.00 +36.00 -57.57 -93.57 +12.00
Jul 18 464.00 567.00 486.00 501.00 77.75 -103.00 +37.00 -57.92 -94.92 +15.00
Aug 18 468.00 565.00 487.00 504.00 78.00 -97.00 +36.00 -60.61 -96.61 +17.00
Sep 18 472.00 563.00 491.00 508.00 78.63 -91.00 +36.00 -61.35 -97.35 +17.00
Oct 18 476.00 561.00 495.00 512.00 79.13 -85.00 +36.00 -62.73 -98.73 +17.00
Nov 18 480.00 559.00 499.00 516.00 79.63 -79.00 +36.00 -64.12 -100.12 +17.00
Dec 18 484.00 557.00 504.00 520.00 80.13 -73.00 +36.00 -65.51 -101.51 +16.00
Jan 19 485.00 554.00 509.00 524.00 80.25 -69.00 +39.00 -65.86 -104.86 +15.00
Feb 19 487.00 553.00 500.00 523.00 83.25 -66.00 +36.00 -52.19 -88.19 +23.00
1Q18 489.00 na na 531.50 82.81 na +42.50 -56.47 -98.97 na
2Q18 465.50 573.50 491.50 503.00 78.00 -108.00 +37.50 -58.11 -95.61 +11.50
3Q18 468.00 565.00 488.00 504.50 78.13 -97.00 +36.50 -59.96 -96.46 +16.50
4Q18 480.00 559.00 499.50 516.00 79.63 -79.00 +36.00 -64.12 -100.12 +16.50
2019 446.00 535.00 461.00 541.00 73.75 -89.00 +95.00 -60.81 -155.81 +80.00

Copyright © 2018 Argus Media group Page 4 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

companies refuse to buy volumes from Uzbekistan in Febru- Middle East and Asia-Pacific averages $/t
Price ±
ary while in January a total of 7,000t of LPG were imported
from the country. Middle East (Feb)
Propane -13.091 +0.623
The propane-butane mix value at the Ukrainian-Roma-
Butane -13.091 +0.623
nian border decreased in line with fresh price indications Argus Middle East Index
and amid declining prices in the Balkan countries. Propane 536.818 -0.563
Butane 518.909 -0.662
INTERNATIONAL SWAPS Argus Far East Index™ (Jan)
Propane 561.989 -0.821
Butane 541.807 -1.098
February cif ARA value was up a marginal 50 ¢/t to $495/t 11+11 propane-butane mix (Jan) 551.898 -0.959
after the front month traded just once during the 4:15-4:30 Argus South China Index (Jan)
liquidity session at $494.75/t. March value was assessed at Propane 560.489 -0.749
Butane 540.307 -1.026
$483/t at timestamp given a widened February-March
Argus East China Index (Jan)
time-spread — now at $12/t — on the back of increasing
Propane 560.989 -0.773
prompt demand in the physical market. Butane 540.807 -1.050
Consecutive days of sharp volatility in spreads between
competing petrochemical feedstocks propane and naphtha Propane: AFEI diff to Mt Belvieu $/t
came to a halt as only slight deviations in price were shown 120
on either side. The front month propane-naphtha spread 110
widened 50 ¢/t to -$86/t, March disparity gained $2/t to
100
-$96/t while April narrowed $1/t reaching -$108/t. Steeper
propane backwardation accounts for progressively greater 90
discounts seen further out on the curve. 80

70
Reported done ($/t)
60
494.75 (2kt) Feb cif ARA (4:15-4:30)
485 Mar cif ARA 50
539.5 Feb AFEI 40
12 Feb-Mar AFEI 31 Jul 17 29 Sep 17 30 Nov 17 31 Jan 18
522 (x2), 523 (x3) Mar CP
23 Mar-Apr CP was assessed $20/t lower at $503/t to mirror the February
521, 522 (x3), 523 (x2) Mar AFEI propane-butane CP swaps differentials set at $20/t.
17.5 (x2) Feb-Mar AFEI
15 Mar-Apr AFEI Asia -Pacific
0 Mar AFEI-CP
43.5 Feb AFEI-cif ARA Refrigerated
Propane premiums against the March Argus Far East Index
MIDDLE EAST (AFEI) climbed higher on the back of firmer bids for 23,000t
propane arriving in first-half March.
Saudi Aramco set the February CP propane and butane CPs A European trader posted the highest bid at February
at $525/t and $505/t, down $65/t for both grades from the AFEI Flat which equated March AFEI +$18/t while three oth-
previous month. ers seeking first-half March arrival cargoes were at March
The freshly-minted CPs were largely in line with market’s AFEI +$12-$14/t. An oil major countered with an offer at
expectations after term customers submitted the second February AFEI +$5.5/t which equated March AFEI +$23.5/t
round of recommendations with propane pegged at $515- though no deal was concluded at Asian timestamp. While the
520/t. afternoon trading window was populated with a total of nine
Spot discounts for cargoes loading 21-28 February in the bids and offers for March arrival cargoes, it was devoid of
Mideast Gulf were assessed at parity to the February CP. discussions on February arrival ones.
As such, the Argus Middle East Index (AMEI) was assessed A Korean importer reportedly procured 23,000t propane
at $525/t and $505/t for propane and butane respectively. for second-half February arrival last evening at February
March propane CP swaps were unchanged day-on-day to AFEI +$6-6.5/t though this could not be confirmed. The
settle at $523/t at Asian timestamp. Its butane counterpart buyer had sought the prompt cargo at February AFEI +$5.5/t

Copyright © 2018 Argus Media group Page 5 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

yesterday though the bid was unmet at Asian close of trade. Asia-Pacific $/t
Strong demand from the petrochemical sector had sent CP basis Timing ­± Bid Ask ±

many northeast Asia importers scrambling to cover shorts Propane

alongside Chinese buyers who had returned with earnest Gulf CP fob Feb Feb -5.00 / 5.00 +10.00

seeking end-February to early-March cargoes though length Argus Middle East Index 525.00 +10.00
Japan CP cfr Feb 1H Mar +1.00 18.00 / 21.50 +1.00
in the February market were heard to be ample.
Japan cfr +1.00 543.00 - 546.50 +1.00
Formosa Plastics’ tender seeking 22,000t propane each
Taiwan CP cfr Feb 1H Mar +1.00 18.00 / 21.50 +1.00
month from April-December 2018 and/or July 2018-June
East China CP cfr Feb 2H Feb +1.00 18.00 / 21.50 +1.00
2019 closes 2 February where bids are to remain valid till 6
East China cfr +1.00 543.00 - 546.50 +1.00
February. South China CP cfr Feb 2H Feb +1.00 18.00 / 21.50 +1.00
There were no bids and offers in the butane-heavy South China cfr +1.00 543.00 - 546.50 +1.00
market on Wednesday after a Chinese trader failed to return Argus Far East Index™ (AFEI™) 544.75 +1.00
to offer 11,500t+11,500t for second-half February arrival. Butane
But with spot butane values hovering at $68/t under March Gulf CP fob Feb Feb -5.00 / 5.00 +10.00
naphtha prices, ethylene crackers were likely ramping up Argus Middle East Index 505.00 +8.00

their change in feedstock slate. Japan CP cfr Feb 1H Mar +9.00 12.00 / 15.50 +9.00
Japan cfr +7.00 517.00 - 520.50 +7.00
11,500t+11,500t cargoes arriving 25-28 February were
Taiwan CP cfr Feb 1H Mar +9.00 12.00 / 15.50 +9.00
assessed at $534.5/t, depicting the average of propane and
East China CP cfr Feb 2H Feb +9.00 12.00 / 15.50 +9.00
butane AFEI for second-half February delivery and a lower
East China cfr +7.00 517.00 - 520.50 +7.00
cash premium on butane-heavy cargoes compared to pure South China CP cfr Feb 2H Feb +9.00 12.00 / 15.50 +9.00
propane ones. Cargoes arriving on 1-12 March were assessed South China cfr +7.00 517.00 - 520.50 +7.00
$3.75/t below second-half February values and equated to West coast India CP cfr Feb Feb +9.00 7.00 / 10.50 +9.00
$530.75/t, mirroring the same backwardated structure as Argus Far East Index™ (AFEI™) 518.75 +7.00
the propane AFEI. The Argus Mixed Index spanning 25 Febru- 11+11 propane-butane mix
ary-12 March averaged $531.75/t. Japan cfr +4.00 530.00 - 533.50 +4.00

Cfr propane cargoes arriving into south China were South China cfr +4.00 530.00 - 533.50 +4.00
Argus Mixed Index 531.75 +4.00
held steady at parity to cfr Japan. The Argus South China
Propane pressurised
Index for propane spanning 25 February-12 March averaged
South China CP fob Feb Feb 20 / 30
$544.75/t. The Argus South China Index for butane cargoes
South China fob Feb 545 / 555
spanning 25 February-12 March were valued at $518.75/t, South China CP cfr Feb Feb 50 / 60
mirroring butane’s discount to propane in the delivered South China cfr Feb 575 / 585
Japan market. Vietnam CP cfr Feb Feb 55 / 65
Cfr propane cargoes arriving into east China were rolled Butane pressurised
over at parity to cfr Japan values and the Argus East China South China CP fob Feb Feb 20 / 30
Index for propane spanning 25 February-12 March averaged South China fob Feb -2 525 / 535 -2

$544.75/t. The Argus East China Index for butane cargoes South China CP cfr Feb Feb 50 / 60
South China cfr Feb -2 555 / 565 -2
spanning 25 February-12 March were valued at $518.75/t,
Vietnam CP cfr Feb Feb 55 / 65
mirroring butane’s discount to propane in the delivered
Japan market.
Propane swaps (5pm Singapore) $/t

Assessment rationale CP swaps AFEI™ swaps

Propane Argus Far East Index (AFEI) (PA0000403) was Mar 523.00 Feb 541.00

assessed on the basis of bids, offers and other market data. Apr 501.00 Mar 523.00
May 486.00 Apr 505.00
The March AFEI and CP swaps were valued at $523/t
respectively.
Cfr propane cargoes arriving 25-28 February arrival were The propane AFEI spanning 25 February-12 March averaged
maintained at February AFEI +$6.5/t and equated to $547.5/t $544.75/t.
owing to private trade discussions. Cargoes arriving 1-12 The propane AFEI rose by $1/t from the previous session.
March were assessed at March AFEI +$20.75/t and equated Butane Argus Far East Index (AFEI) (PA0000361) was as-
to $543.75/t, reflecting the midpoint of the best bid and sessed on the basis of other market data.
offer for 23,000t propane for first-half March arrival posted Cfr butane prices for cargoes arriving 25-28 February
at the equivalent of March AFEI +$18/t and $23.5/t today. were assessed $26/t lower than propane and equated to

Copyright © 2018 Argus Media group Page 6 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

China wholesale propane/butane mix yuan/t

Review of Asia-Pacific LPG methodology ­± Bid Ask ±
Following consultation with the Asia-Pacific LPG
East China
industry, Argus is reviewing its Asia-Pacific methodology
Ex terminal
for the discharge delivery locations of large refrigerated
Ningbo 4,400 - 4,500
cargoes and welcomes all feedback. Options under
Wenzhou 4,400 - 4,500
consideration include:
Taicang 4,400 - 4,650
„„ including assessments for Ningbo and/or Yosu dis-
Shanghai 4,250 - 4,350
charge in the Argus Far East Index (AFEI) calculation
Zhangjiagang 4,400 - 4,650
Fujian 3,990 - 4,040
„„ creating an east China price that is assessed off an
Ex refinery
east China cfr contract (the terms of this contract to be
Shanghai 4,000 - 4,100
agreed by the industry) Zhenhai 4,350 - 4,750
Yangzi 4,650 - 4,700
„„ including in the assessment market information that Fujian 3,930 - 3,980
otherwise adheres to the terms and conditions of the Gaoqiao 3,950 - 4,050
Ginga forward contract, except that the seller will dis- Qingdao -200 4,300 - 4,400 -200
count the price paid by the buyer if the actual freight South China
cost to the discharge port is lower than the freight cost Ex terminal
to Chiba. Such freight discount shall be calculated using Zhuhai -150 4,070 - 4,120 -150
a method to be established by this consultation and Shenzhen 4,200 - 4,300
agreed by market participants Raoping 3,850 - 4,000
Nansha -30 4,120 - 4,170 -30

„„ making no change to the AFEI methodology Shantou 3,850 - 4,000

Yangjiang 4,000 - 4,050

Argus will also give due consideration to any other Ex refinery

options that market participants might suggest. Argus Maoming 4,000 - 4,050
Guangzhou 3,950 - 4,000
will accept comments on this review up to 30 January
Northeast China ex refinery
2018. To discuss comments, please contact Esther Phua
Daqing -100 4,500 - 4,550 -100
at [email protected]. Formal comments
Dalian 4,450 - 4,550
should be marked as such and may be submitted by
Northwest China ex refinery
email to [email protected] or by post to Esther
Urumqi 3,400 - 3,500
Phua, Argus Media Singapore Group Pte Ltd, 50 Raffles
Inland China ex refinery
Place, #10-01, Singapore Land Tower, Singapore 048623,
Lanzhou 4,050 - 4,100
and received by 30 January 2018. Please note, formal
Yan-An +100 4,250 - 4,300 +100
comments will be published after the consultation pe-
riod unless confidentiality is specifically requested.

Japan: Butane diff to naphtha $/t Propane LST ratio to Nymex WTI %
100 85

80
50
75

0 70

65
-50 60

55
-100
50

-150 45
04 Aug 17 04 Oct 17 01 Dec 17 31 Jan 18 03 Aug 17 02 Oct 17 30 Nov 17 31 Jan 18

Copyright © 2018 Argus Media group Page 7 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

$521.5/t, in consideration of butane-heavy cargoes trading Mont Belvieu +5.5¢/USG, but no firm bids were reported.
at lower cash differentials than pure propane ones. Cargoes VLGC freight was quiet.
arriving on 1-12 March were assessed $3.75/t below second- Market participants studied US inventory data showing
half February values and equated to $517.75/t, mirroring a smaller than expected draw in stockpiles last week, with
the same backwardated structure as the propane AFEI. some suggesting it now appears US production is managing
The butane AFEI spanning 25 February-12 March averaged to keep up with the higher pace of exports relative to last
$518.75/t. year. If the four-week average of US propane production,
The butane AFEI rose by $7/t from the previous session. consumption and exports remained steady throughout the
rest of the US heating season, the US would be drawing
Pressurised down stockpiles by approximately 530,000 b/d, based on EIA
Asian spot pressurised premiums were stable amid a lack of data, leaving US inventories around 23mn bl by April, just
fresh spot trading activity. under the inventory levels seen following the “polar vortex”
Export offers from south Chinese terminals for February- of 2014. Market participants say stocks are unlikely to dip
loading cargoes were assessed at February CP +high $20s/t, to those levels, however, as milder weather is likely to curb
while notional offers to north Vietnam were pegged at Feb- heating demand in March, estimating the heating season will
ruary CP +high $50s/t on a cfr Haiphong basis. end with stockpiles above 30mn bl.
Chinese domestic prices were largely unchanged owing
to limited discussions at the end of the month. US
Ex-terminal prices in south China fell by 30-150 yuan/t at
Zhuhai and Nansha due to bearish market sentiments. But Mont Belvieu light NGLs
firmer spot prices in the Far East delivered market stemmed Mont Belvieu, Texas, LST propane's midpoint settled slightly
further domestic price declines. lower than the prior session in choppy activity following
No price changes were seen at Maoming refinery and news of a smaller than expected 932,000 bl draw in
Guangzhou refinery. inventories last week. LST was valued at a weaker 55.31pc
Ex-terminal prices in east China were largely unchanged of WTI.
as most market participants waited for the release of the Market participants' forecasts called for anywhere be-
February CP today. tween a 950,000 bl build and a 4.3mn bl draw in stocks last
Ex-refinery prices in east China were also largely steady. week due to steady heating and export demand.
Only prices at Qingdao Shandong province slumped by LST propane opened 0.125¢ lower at 85.25¢/USG and fell
Yn200/t to Yn4,300-4,400/t in order to stimulate sales. to 83.75¢/USG following the data but rebounded to 86.75¢/
In north China, Daqing refinery lowered prices by Yn100/t USG thereafter. LST propane's midpoint was assessed at
to Yn4,500-4,550/t as they sought to lower their inventories 85.25¢/USG, down 0.125¢ from the prior day’s midpoint.
at the end of the month. January/February spreads narrowed from a 1¢ backward-
In inland China, Yan’an refinery pushed prices higher by ation to parity by day's end.
Yn100/t to Yn4,250-4,300/t on the back of declining stock- January LST/EPC propane spreads priced EPC at a weaker
piles. 0.125-0.75¢ premium.
EPC propane opened in line with the prior session at
US Gulf exports 86¢/USG and fell to 84.5¢/USG following the data before
recovering to 87¢/USG. EPC propane was assessed at 85.75¢/
The US/FEI March/April propane arbitrage on paper stood USG, down 0.25¢ from the prior session. January/February
below $75/t by midday, and spot fob discussions for March spreads priced the next month either at parity or a 0.125¢
loadings were muted. March was heard offered as low as backwardation.

Announcement

Argus successfully completes annual Iosco assurance review

Argus has completed the sixth external assurance review of its price benchmarks covering crude, products, biofuels, ther-
mal coal, coking coal, natural gas, biomass and petrochemicals benchmarks. The review was carried out by professional
services firm PwC. Annual independent, external reviews of oil benchmarks are required by international regulatory group
Iosco’s Principles for Oil Price Reporting Agencies, and Iosco encourages extension of the reviews to non-oil benchmarks.
For more information and to download the review visit our website http://www.argusmedia.com/About-Argus/How-We-
Work/

Copyright © 2018 Argus Media group Page 8 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

Targa propane traded between 83.75-86¢/USG. Hatties- Americas: Mont Belvieu pipeline fob (Jan) ¢/USG
burg propane traded between 93.75-95¢/USG. VWA ­± Low High ±

EPC ethane fell sharply in selling at month's end as Enterprise

declines in natural gas further eroded support. EPC ethane Propane 85.672 -0.250 84.500 - 87.000 -0.250

was valued at a weaker 4.5¢ premium to its fuel value. EPC Propane equivalent $/t -1.305 441.344 - 454.401 -1.306

ethane opened at 25.125¢/USG, down 2¢ from the previous Butane 96.215 -0.250 94.500 - 100.000 +2.750
Butane equivalent $/t -1.133 428.085 - 453.000 +12.457
session, and fell as low as 22.5¢/USG before rebounding to
Purity ethane 24.807 -4.250 22.500 - 26.000 -1.375
26¢/USG. February traded at 24.875¢/USG, and a January/
Purity ethane equivalent $/t -31.000 166.000 - 192.000 -10.000
February spread priced next month at a 0.5¢ contango.
Ethane-propane mix 24.875 -2.125 24.625 - 25.125 -2.125
Targa ethane traded between 25.125-25.75¢/USG. Isobutane 111.179 +1.875 111.000 - 112.000 +1.125
Nymex March light, sweet crude futures rose by 23¢/bl to Natural gasoline 141.261 -1.500 140.000 - 142.000 -1.625
$64.73/bl. Nymex RBOB gasoline futures rose by 1.21¢/USG LST
to $1.9075/USG. Henry Hub natural gas futures fell by 20¢/ Propane 85.103 -0.625 83.750 - 86.750 +0.375
mnBtu to $2.995/mnBtu. Butane 83.375 -0.500 82.000 - 84.750 +1.750
Targa

Assessment rationale Propane 84.875 -0.750 83.750 - 86.000

For LST and EPC propane, the minimum volume was met and Ethane 25.438 -1.500 25.125 - 25.750 -1.625

the low-high range and VWA calculated according to the

US Enterprise averages ¢/USG
methodology.
Month to date ±

Propane (Jan) 90.271 -0.226

Mont Belvieu heavy NGLs
Butane (Jan) 100.033 -0.139
Mont Belvieu, Texas, EPC butane firmed on Wednesday.
Prompt prices gained in the afternoon as the market finished
US forward market ¢/USG
USGC propane ± Low High ±
Low High Mean Mont Belvieu propane
fob USGC, diff to Mont Belvieu ¢/USG +4.000 +5.500 +4.750 Jan +1.000 86.000 - 86.500 +1.000
fob USGC ¢/USG 86.000 87.500 86.750 Feb +1.250 85.625 - 86.125 +1.250
fob USGC $/t 449.2 457.0 453.1 Mar +1.125 82.750 - 83.250 +1.125
del Japan (AUSJ) $/t 508.0 516.0 Apr +1.250 79.625 - 80.125 +1.250
del ARA (AUSE) $/t 478.0 486.0 2Q18 +1.375 78.875 - 79.375 +1.375
Mont Belvieu butane
LPG freight
Jan +5.000 99.750 - 100.250 +5.000
Low High Mean
Feb +2.250 97.000 - 97.500 +2.250
Handysize Houston EC Mexico $/t 12.00 Mar +1.625 92.875 - 93.375 +1.625
VLGC Houston-Chiba $/t 59.00 Apr +1.375 91.375 - 91.875 +1.375
VLGC Houston-Flushing $/t 29.00 2Q18 +1.250 91.000 - 91.500 +1.250

Propane LST diff to ethane non-LST ¢/USG MtB: Nat gasoline diff to butane non-LST ¢/USG

90 60

50
80

40
70
30
60
20

50
10

40 0
03 Aug 17 02 Oct 17 30 Nov 17 31 Jan 18 03 Aug 17 02 Oct 17 30 Nov 17 31 Jan 18

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Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

AMERICAS DEALS

Mont Belvieu spot deals Mont Belvieu spot deals

Timing ¢/USG bl Timing ¢/USG bl

Butane EPC Jan 94.375 5,000 Jan 95.000 5,000

Jan 94.500 10,000 Jan 95.000 5,000
Jan 94.750 10,000 Jan 95.000 5,000
Jan 94.875 50,000 Jan 95.250 10,000
Jan 95.500 15,000
Jan 95.500 10,000
up last-minute January business. Butane was valued at a Jan 96.250 10,000

stronger 51pc of RBOB. Jan 96.500 10,000

Jan 96.750 10,000
EPC butane opened 0.75¢ higher at 96.75¢/USG and
Jan 97.000 15,000
fell as low as 94.5¢/USG before recovering to 100¢/USG in
Jan 97.000 10,000
the afternoon. February traded at 97.375¢/USG. January/ Jan 97.250 5,000
February spreads priced the next month at a wider 0.625¢ Jan 98.000 10,000
backwardation as prompt prices rose. Jan 98.250 10,000
EPC isobutane opened 1.75¢ higher at 111.75¢/USG and Jan 98.250 5,000
Jan 99.250 5,000
fell to 111¢/USG before trading again at 112¢/USG late in
Jan 100.000 10,000
the session. A small volume traded at 108.75¢/USG. Spreads
Jan 100.000 5,000
priced isobutane at an 8.75¢ and 12¢ premium to normal Feb 97.375 10,000
butane. Jan/Feb 0.625 10,000
EPC natural gasoline fell amid thin activity on the last Jan/Feb 0.625 10,000
day of January. Natural gasoline opened 1.375¢ lower at Jan/Feb 0.625 5,000
141.25¢/USG and traded between 140-142¢/USG. Natural Ethane EPC Jan 22.500 10,000
Jan 24.000 20,000
gasoline was valued at a weaker 91.5pc of WTI. February
Jan 24.000 10,000
traded at 142.25¢/USG. A January/February spread priced
Jan 24.000 10,000
February at a 0.25¢ carry, and a February/March spread Jan 24.250 100,000
priced March at a 0.5¢ backwardation. Jan 24.375 20,000
Jan 24.375 20,000
Assessment rationale Jan 24.750 10,000
For EPC butane and EPC natural gasoline, the minimum Jan 24.875 10,000
Jan 25.000 30,000
volume was met and the low-high range and VWA calculated
Jan 25.000 10,000
according to the methodology.
Jan 25.000 10,000
Mont Belvieu LST refinery grade butane was assessed Jan 25.125 50,000
using a midpoint of 83.375¢/USG pricing it at a 13.875¢/USG Jan 25.125 15,000
discount relative to the Mont Belvieu EPC butane market. Jan 25.125 10,000
The discount reflects where bids and offers were seen during Jan 25.125 5,000

the session and was used to formulate the assessment in the Jan 25.750 10,000
Jan 26.000 25,000
absence of outright trades. A polling of market participants
Jan 26.000 20,000
did not yield any fresh price indications for the grade. The
Jan 26.000 15,000
minimum aggregate volume traded did not meet the volume Jan 26.000 10,000
weighted average methodology. Feb 24.875 20,000
Jan/Feb -0.500 20,000
INDUSTRY NEWS Ethane Targa Jan 25.125 10,000
Jan 25.750 10,000
Isobutane EPC Jan 108.750 5,000
VLGC, product tanker collide in South Korea
Jan 111.000 10,000
The 83,000m³ Passat very large gas carrier (VLGC) was
Jan 111.750 10,000
involved in a minor collision with 60,000t long-range product Jan 112.000 10,000
tanker the New Confidence in South Korea earlier today, Isobutane EPC/Butane EPC Jan 8.750 5,000

Copyright © 2018 Argus Media group Page 10 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

AMERICAS DEALS

Mont Belvieu spot deals Mont Belvieu spot deals

Timing ¢/USG bl Timing ¢/USG bl

Jan 12.000 10,000 Jan 85.500 10,000

Natgaso EPC Jan 140.000 10,000 Jan 85.625 10,000
Jan 141.000 10,000 Jan 85.625 10,000
Jan 141.250 10,000 Jan 85.750 10,000
Jan 141.375 10,000 Jan 85.875 5,000
Jan 142.000 10,000 Jan 86.000 10,000
Jan 142.625 5,000 Jan 86.000 10,000
Feb/Mar 0.500 30,000 Jan 86.250 10,000
Feb 142.250 20,000 Jan 86.250 10,000
Jan/Feb -0.250 20,000 Jan 86.250 10,000
Propane EPC Jan 84.500 10,000 Jan 86.500 10,000
Jan 84.750 20,000 Jan 86.500 10,000
Jan 84.750 10,000 Jan 86.625 10,000
Jan 85.000 10,000 Jan 87.000 15,000
Jan 85.250 10,000 Jan/Feb 0.000 30,000
Jan 85.250 10,000 Jan/Feb 0.125 3,000
Jan 85.250 5,000 Propane LST Jan 83.750 10,000
Jan 85.250 5,000 Jan 84.125 15,000
Jan 85.500 10,000 Jan 84.500 5,000
Jan 85.500 10,000 Jan 84.500 5,000
Jan 85.500 10,000 Jan 84.750 10,000
Jan 85.500 10,000 Jan 84.875 10,000
Jan 85.500 10,000 Jan 84.875 10,000
Jan 85.500 10,000 Jan 85.000 10,000
Jan 85.000 10,000
Jan 85.000 10,000
Jan 85.125 10,000
Jan 85.250 10,000
likely leading to delays to the vessels’ voyages. Jan 85.500 10,000
The accident occurred at the outer anchorage area of Jan 85.875 10,000
Pyongtaek, South Korea, causing damage to the hull of the Jan 85.875 8,500
Jan 86.000 10,000
Passat. There were no injuries, and no oil spills or pollution
Jan 86.750 10,000
has been reported.
Jan/Feb 0.000 10,000
The VLGC is owned by Norwegian shipowner Avance Gas, Jan/Feb 0.125 9,879
while the New Confidence is managed by Singapore-based Jan/Feb 0.250 25,000
Straits Tankers. Port authorities have been informed and the Jan/Feb 0.250 10,000
coast guard is on board, Avance Gas said. Jan/Feb 0.375 10,000

The accident could cause delays for both tankers, as Jan/Feb 0.375 10,000
Jan/Feb 0.500 10,000
South Korean authorities will need to inspect the vessels
Jan/Feb 1.000 10,000
and issue an accident report. Shipping reports show the New
Propane LST/EPC Jan -0.750 10,000
Confidence was due in South Korea to move a clean petro- Jan -0.750 10,000
leum cargo to Singapore for refiner Hyundai Oilbank at a rate Jan -0.750 10,000
of $310,000, with prompt loading on 5 February. It is unclear Jan -0.750 5,000
if Hyundai Oilbank is seeking a replacement vessel. Tracking Jan -0.750 5,000

data show the Passat was chartered for a voyage from Los Jan -0.625 10,000
Jan -0.125 20,000
Angeles to South Korea, possibly by Canadian firm Petrogas
Propane Targa Jan 83.750 10,000
although this could not be confirmed.
Jan 86.000 10,000

Copyright © 2018 Argus Media group Page 11 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

INDUSTRY NEWS

Saudi Aramco cuts February propane, butane CP and butane was last assessed at $543.75/t and $511.75/t
Saudi Arabia’s state-owned Saudi Aramco has reduced its respectively, indicating a grade spread of $32/t.
contract price (CP) for propane and butane in February,
sending the values to their lowest levels in five months. Lebanon LPG imports decline in 2017
The February CP has been set at $525/t for propane and Imports of LPG in Lebanon edged lower in 2017, customs
$505/t for butane. This is down sharply by $65/t for both data show, as mild temperatures in the fourth quarter
grades compared with the January CP, which was set at weighed on demand.
$590/t for propane and $570/t for butane. Lebanon imported 237,000t of LPG last year, down by
Aramco rolled over last month’s discount for term buy- 0.8pc from 2016. While imports in the first half of the year
ers loading from Yanbu for the fourth consecutive month, exceeded volumes imported during the same period the
maintaining the discount at $6/t against the February CP for previous year, they significantly slowed in the second half of
February-loading shipments. the year.
The February propane CP was slightly higher than market The country imported 114,000t in the second half of
expectations based on recommendations submitted by Ar- 2017, compared with 120,000t in the same period in 2016.
amco’s term customers over the last two weeks. First-round Demand for domestic heating was capped by warmer-than-
recommendations put propane at $515-530/t and butane at usual weather at the end of the year, and LPG imports fell
$495-515/t. The second round of recommendations yesterday by 7.5pc year on year in the last quarter of 2017.
tightened the range to $515-520/t for propane, while butane Some 26,000t of LPG were imported in December, a
was $15-20/t lower than propane at $500-505/t. jump of 37pc from November and the highest monthly
Most individual firms adjusted their values lower, with imported volumes recorded last year as domestic demand
the February CP paper swaps having come under pressure seasonally ramped up. But this increase was insufficient to
since the start of the year. February propane CP paper offset the falls reported in previous months and December
swaps fell by $63/t over the course of this month to close at volumes were 13pc lower than those in the same month in
$525/t yesterday, despite firmer crude values. 2016.
The decline in the February CP compared with the Butane represents around 88pc of LPG imported to Leba-
previous month was driven by subdued Asian spot demand. non, with the remainder propane. Imported volumes of the
Buying interest from China has been muted as import- latter remained steady in 2017 at 29,000t, after having fallen
ers avoid keeping their inventories too high ahead of the by 29pc between 2015 and 2016.
major lunar new year festival in mid-February. A Chinese
trader was looking to sell a 23,000t propane parcel and an US propane stocks fall by 932,000 bl: EIA
11,500t+11,500t cargo for second-half February arrival in the US propane inventories fell by 932,000 bl to 53.1mn bl for
afternoon trading window session on 29 January. A steep the week ended 26 January, according to the Energy
backwardation in the market structure – with near-month Information Administration (EIA).
prices above those further forward – also likely pushed im-
porters to delay their purchases to March deliveries.
Prompt demand from India has also been weak owing Butane: Mt Belvieu non-LST ratio to WTI ¢/USG
to high onshore stockpiles, with some cargoes heard de- 95
ferred to March delivery. A 45,000t propane cargo and a
90
22,000t+22,000t cargo for February-loading was deferred to
85
the following month by two trading firms.
But supplies remained ample with few cancellations 80
heard from the US. Firm selling interest for cargoes sold on 75
a delivered basis weighed on cfr differentials, with cash pre-
70
miums for February-arrival cargoes mostly hovering at just
65
$1-3/t against the February Argus Far East Index (AFEI).
The Argus Middle East Index (AMEI) for cargoes loading in 60
the Mideast Gulf from 21-28 February was at $515/t for pro- 55
pane and $497/t for butane yesterday. The AFEI for propane 03 Aug 17 02 Oct 17 30 Nov 17 31 Jan 18

Copyright © 2018 Argus Media group Page 12 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

INDUSTRY NEWS

Inventories now stand 15pc lower than the same time Secrest told analysts on today's call. "When these contracts
last year. first started it was a different deal, those were the guys
The draw was much smaller than the 2.5mn bl draw making most of the money and the terminaling guys were
expected by the market but fell within the predicted range just making their standard fee, but it has definitely swung
of a 4.3mn bl draw and a 950,000 bl build. the other way."
The midcontinent fell by 807,000 bl to 14.7mn bl on Spot fob prices for LPG export cargoes averaged Mont
steady heating demand. That region stands 9.8pc lower than Belvieu +5¢/USG during the fourth quarter, according to
the same time last year. Argus data.
The Gulf coast fell by 201,000 bl to 32.8mn bl. Exports Enterprise reported an average of 3.3mn b/d of NGL
fell to 694,000 b/d from 722,000 b/d during the prior week pipeline transportation volumes in the fourth quarter, up
on occasional fog delays. from an average of 3.1mn b/d in the fourth quarter of 2016.
US propylene at bulk terminals rose by 298,000 bl to In 2017, Enterprise reported an average of 3.2mn b/d of NGL
2.9mn bl. Propane/propylene supplied to end users fell by pipeline transportation volumes, an increase of 6.8pc from
239,000 b/d to 1.5mn b/d. 2016.
Mont Belvieu, Texas, EPC propane opened at 86¢/USG, NGL fractionation volumes rose to an average of 863,000
unchanged from the prior day, and fell to 84.5¢/USG fol- b/d in the fourth quarter, up from 846,000 b/d the year
lowing the small draw. LST propane opened 0.125¢ lower at prior. NGL fractionation volumes averaged 831,000 b/d in
85.25¢/USG and fell to 83.75¢/USG. 2017, a slight increase from 828,000 b/d in 2016.
Enterprise reported a profit of $797.3mn in the fourth
NGL exports to continue growing: Enterprise quarter, up from $669.7mn the year prior. For 2017, Enter-
Enterprise Products Partners expects more LPG and ethane prise reported a profit of $2.88bn, up from $2.58bn in 2016.
to be exported in 2018 following a 28pc year-over-year
increase in marine terminal volumes in the fourth quarter of Enterprise nears end of PDH commissioning
2017. Enterprise Products Partners' long-delayed 750,000 t/yr
Enterprise reported an average of 564,000 b/d of NGLs propane dehydrogenation (PDH) unit has been running at
exported during the fourth quarter, up from 440,000 b/d in near full capacity and is in the latter stages of the
the fourth quarter of 2016. For the year, Enterprise saw an commissioning phase, chief executive Jim Teague said today.
average of 516,000 b/d of NGL exports, an increase of 18pc Speaking on the company's fourth quarter conference
from 2016. call, Teague indicated two years of delays are approaching
Senior vice-president Anthony Chovanec told analysts on their end.
today's call that more export terminal capacity will need to "We expect commissioning to last one more month,
be added. Enterprise's latest US LPG supply forecast calls for through the end of February. We have produced on-spec
US production to exceed consumption and exports in 2020. product and would like to get to nameplate capacity soon,"
Enterprise can export approximately 16mn bl of NGLs a Teague said.
month at its terminal on the Houston Ship Channel. Enter- Enterprise sued contractor Amec Foster Wheeler in 2016
prise’s Morgan’s Point ethane export terminal has a loading for cost overruns and delays, three years after it was chosen
capacity of 10,000 bl per hour. to build the PDH unit. The lawsuit is ongoing.
The need for additional LPG export capacity comes as US Hurricane Harvey further delayed startup and commis-
term customers continue to move LPG, mostly propane, to sioning activities only began in late 2017.
Asia in increasing volumes. US exports hitting the interna- "PDH units are large, complicated facilities and problems
tional markets has narrowed the arbitrage between the US are to be expected," Teague said.
and Asia for much of the past year. This is limiting some op-
portunities for traders and shippers in the current environ- Total restarts some PS production
ment, according to Enterprise. Total Petrochemicals restarted some polystyrene (PS) lines
"The feedback that we are seeing, the traders are strug- this week after styrene monomer production improved at its
gling with it, the guys who are taking it across the water are CosMar joint venture plant with Sabic in Carville, Louisiana,
struggling with it, and so the folks who did the take-or-pay according to a 30 January letter sent to customers.
terminaling fees I think, those are ones who are probably A weather-related outage at the styrene unit forced the
making money in this market," senior vice-president Brent company last week to slow PS production and declare force

Copyright © 2018 Argus Media group Page 13 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

INDUSTRY NEWS

majeure on PS. For now, the force majeure remains in place, Delaware governor seeks fuel blending waiver
but the company has restarted two PS lines that had been Federal fuel blending requirements pose a severe economic
shut down because of a lack of styrene. harm to Delaware and should be reduced, the state's
One of the two CosMar styrene units restarted over governor said in a letter to the Environmental Protection
the weekend, although the second unit will require repairs Agency (EPA).
extending into the month of February, the letter said. The Governor John Carney (D) requested EPA waive or reduce
company’s raw materials group has acquired enough sty- fuel blending obligations under the Renewable Fuel Standard
rene to replace production from that unit while repairs are (RFS) for PBF Energy, which operates a 190,000 b/d refinery
completed. in Delaware City, Delaware.
In addition to the two idled lines, two other PS lines have The refinery incurred $90mn in costs under the program
been running at reduced rates. It was not immediately clear last year, Carney said in the 30 January letter. A PBF repre-
whether those lines would return to normal rates. sentative could not be immediately reached for comment.
EPA did not immediately comment on the letter.
Valero Ardmore gasoline unit shuts Carney's request referenced this month's bankruptcy fil-
Valero shut a gasoline unit at its 85,000 b/d refinery in ing by Philadelphia Energy Solutions (PES), which cited costs
Ardmore, Oklahoma, this week. for renewable identification numbers (RINs) needed to prove
The refiner shut a fluid catalytic cracker (FCC) unit on 29 compliance with the mandates.
January, according to a filing to state environmental regula- "We need a Renewable Fuel Standard policy that truly
tors. Increased emissions from the unit were also reported balances both the needs of our economy and our environ-
on 30 January. ment," Carney said in the letter. "It is important that we
FCCs convert gasoil primarily to gasoline blendstocks. work to reduce the United States' dependence on foreign oil
Valero also reported excess emissions from two crude by crafting policies that work to both stabilize the RIN mar-
atmospheric tower heaters on 28 January. ket and ensure that independent refineries here in Delaware
and the Mid-Atlantic continue to remain strong."
CVR Wynnewood reports gasoline unit upset Midcontinent pipeline construction and the resumption of
A gasoline unit malfunctioned twice over the past week at US crude exports in 2015 have returned all US Atlantic coast
CVR’s 73,000 b/d refinery in Wynnewood, Oklahoma. refineries to dependence upon foreign crude. Rising prices
A hydrocracker upset led to increased emissions on 26 for light, sweet Bakken production curbed discounts that al-
January, according to a filing to state environmental regula- lowed profitable movements of the crude by rail to the east
tors. The unit malfunctioned again on 27 January. coast and into terminals owned by PBF and PES.
Hydrocrackers use hydrogen, pressure and catalyst to RFS requires refiners, importers and other companies to
produce distillates and gasoline low in contaminants such as each year ensure minimum volumes of renewables blend into
sulfur. the fuels they add to the US transportation supply. Com-
The refiner also reported increased emissions from its panies that do not directly blend these fuels must acquire
new north flare on 24 and 27 January. RINs demonstrating that blending from competitors or other
companies.
HollyFrontier Tulsa reports unit upset Refiners including PBF have for years criticized the
A gasoline unit upset led to increased emissions last week at program and sought its reduction or repeal. But the industry
HollyFrontier’s 125,000 b/d refinery in Tulsa, Oklahoma. has split over whether refiners and importers bear the cost
The refiner reported excess emissions from an alkylation alone or have passed the price on to consumers.
unit on 24 January, according to a filing to state environmen- Pennsylvania governor Tom Wolf (R)requested a similar
tal regulators. economic harm finding in November.
HollyFrontier did not identify the cause of the malfunc-
tion. Colombia imports 7,000 t/month of US LPG
Alkylation units produce high-octane blendstocks that Colombia has been importing as much as 7,000 tonnes/
are used in gasoline. month of liquefied petroleum gas from the US Gulf coast
In November, HollyFrontier said turnaround work in the since November, as state-controlled Ecopetrol uses it to
west plant of the facility would begin in February. dilute heavy crude or generate electricity, draining the

Copyright © 2018 Argus Media group Page 14 of 16

Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

INDUSTRY NEWS

domestic market, said Alejandro Martinez, president of LPG But Ecopetrol would need to invest $150mn to install
Association Gasnova. the plant in Cupiagua, located in the eastern province of
The private consortium G5, made up of five LPG dis- Casanare, and it is uncertain whether the oil company wants
tributors, are expected to import 5,000 t/month of LPG, to invest that amount, Martinez said.
while Ecopetrol will bring 2,000 t/month to cover the local Ecopetrol could also boost LPG output at the Barran-
market, Martinez said. cabermeja refinery, which currently produces 16,000t/
G5, made up of Almagas, Chilco, Inversiones del Nor- month. Output could also increase at the 44,000 barrels of
deste, Montagas and Vidagas, began importing LGP in oil equivalent (boe) per day Cusiana field, also controlled by
November for the first time ever as local supply was insuf- Ecopetrol.
ficient to cover national LPG demand. Colombia consumes 50,000 t/month of LPG or 600,000
Seven cargoes of 1,700t each have arrived at the new t/yr. Of that total, Ecopetrol supplies as much as 40,000 t/
$3.5mn Cartagena terminal. G5 is bringing 5,000t/month month, followed by private LPG producer TermoYopal, which
since November 2017, while Ecopetrol is importing 2,399 t/ provides 4,000t/month. Smaller private fields controlled by
month. Canadian PetroSantander and Pegasus supply the balance
“Imports are necessary, but they are not the solution to 1,000t/month.
guarantee supplying fully demand for this fuel in the differ- “In the medium term, new LPG production projects will
ent regions of the country," Martinez said. "As a result, it is generate significant surpluses not only for the agricultural,
necessary to increase the national supply of LPG in the short industrial and residential sectors, but also for the automo-
term.” tive industry and electricity generation,” Martinez said.
Ecopetrol has the largest potential to increase LPG Colombia is also laying the groundwork to establish a
supply. Ecopetrol would need to install an LPG plant in the domestic market for vehicular LPG that would develop once
Cupiagua field to add between 4,000t/month and 7,000t/ there is surplus LPG. The Ministry of Mines has authorized
month, enough to cover the shortfall. carrying out pilot projects on vehicular LPG.

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Argus International LPG Issue 18-22  |  Wednesday 31 January 2018

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