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NWE imports of US LPG surge in 3Q but winter bearish
NWE imports of US LPG surge in 3Q but winter bearish
Downstream demand is unlikely to pick up, with concerns around an oversupplied market also weighing on sentiment, writes Efcharis Sgourou London, 1 October (Argus) — Northwest Europe's imports of LPG from the US rose sharply in the third quarter as regional demand unexpectedly firmed during the summer off-season. And arrivals are likely to drop this winter, contrary to typical seasonal patterns. The region imported around 580,000t of US LPG in September, the second-largest monthly volume this year after August's 592,000t, Argus estimates. This lifted arrivals to 1.74mn t during the third quarter, the highest since late 2022 and nearly a third up from 1.34mn t in the second quarter. The increase in import demand came as a result of regional supplies falling significantly during maintenance season in the North Sea, in particular at Norway's Karsto, Kollsness and Nyhamna gas processing plants. Some earlier-than-expected demand for stockbuilding prior to winter then led to prompt buyers on the spot market raising their bids in order to attract US LPG cargoes, in turn bolstering the price of cif Amsterdam-Rotterdam-Antwerp (ARA) propane large cargoes, which rose to their highest against front-month Ice Brent crude in more than a year. The spread between northwest European propane import prices and northeast Asian equivalents under the Argus Far East Index (AFEI) started to narrow towards the end of the third quarter, with the cif ARA discount reaching a little under $50/t compared with over $100/t in June and May. And although the transatlantic arbitrage was largely shut from July onwards, a few narrow periodic openings allowed European buyers to compete with Asia for US cargoes. Looking to the fourth quarter, spot buying interest for large cargo deliveries in the first half of October looks relatively firm but downstream demand is likely to remain static rather than picking up as temperatures fall. European ethylene steam cracker demand is also unlikely to grow as although run rates improved over the past few months, they are yet to fully recover from recent lows. Propane has been at a steep discount to naphtha from March until May at below -$150/t, supporting demand from flexible crackers. But it has narrowed significantly since, the spread rising above -$50/t in late August — the tightest since February 2023 — and standing at -$66/t by 25 September, curbing buying interest from the sector. The spread could widen marginally in the final quarter but it may not be able to incentivise more demand. The Karsto processing plant's return to full operations from late September and most other North Sea works coming to a close, as well as an anticipated light turnaround schedule for the region's refineries, will increase northwest European supply in the fourth quarter and decrease the dependency on imports of US LPG. Concerns the supply might overshoot demand has weighed on spot market sentiment in Europe, with October cif ARA propane swaps standing at $583/t on 24 September, compared with $569.50/t for December paper — an unusual backwardated structure into one of the peak months in terms of demand. The backwardation — prompt prices at a premium to later ones — is less indicative of prompt market bullishness and more a reflection of weak sentiment towards the end of the year. Heavy Asian stockpiling Sentiment in Asia-Pacific is also weak, with the AFEI forward structure in backwardation of around $5-7/t between October and December. This is largely a result of heavy stockpiling in Asia during the third quarter that has weighed on paper prices. Meanwhile, front-month US prices at the US Gulf coast hub of Mont Belvieu have traded at discounts to December prices given concerns over exports during the fourth quarter. The price of US Gulf coast fob cargoes jumped to 25¢/USG premiums to Mont Belvieu prompt prices in September from 12¢/USG in June and 9¢/USG in May, an indication that export terminals are nearing capacity. Planned expansions of some of the key terminals are not due to start up until 2025 and 2026. NWE imports of US LPG NWE propane vs Ice Brent crude NWE, NE Asia propane forward curves Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
LPG World editorial: Think tanks
LPG World editorial: Think tanks
LPG storage capacity continues to expand as the latest LPG World survey grows to more than 1,300 facilities across the world London, 1 October (Argus) — China's petrochemical expansion continues to be at the forefront of global investments in new LPG storage capacity, although a shifting focus away from propane dehydrogenation (PDH) to cracking and more interest in exploiting ethane is altering the make-up of such projects. The number of Chinese storage facilities in the latest Global LPG Storage Survey 2024 rises to 130 from 126 in 2023, while capacity reaches about 6.7mn t, up from close to 5.9mn t. The two most significant contributions come from new terminals in east and northeast China. Befar New Material's import facility in Binzhou, Shandong province, and Hengli Petrochemical's Dalian terminal in Liaoning province. Both are capable of storing 160,000t of LPG — 80,000t of propane and butane apiece — and will be used to support their petrochemical units, as well as providing them with more opportunity to sell domestically. The refreshed storage survey exclusive to LPG World is the first to include ethane-specific terminals — as well as breaking down the large North American natural gas liquid (NGL) storage caverns into approximate capacities for LPG and ethane based on regional upstream yields. China is again playing the most prominent part in trying to seize growing volumes of cheap US ethane for its petrochemical sector through the development of new infrastructure across the supply chain, including ships. As a result, the survey includes Satellite Chemical's Lianyungang terminal in Jiangsu, which can store 320,000t of ethane, as well as Huatai Shengfu's facility in Ningbo, Zhejiang, which can accommodate 80,000t — both can also accept newly built very large ethane carriers (VLECs). And China is also dominant in the survey's first ever devoted section to the most significant storage projects, being home to five of the 10 developments included. A trio of new LPG terminals in Guangdong province in south China will each add 120,000t of capacity, while a new 50,000t unit will open in Qingdao, Shandong, all of which are due to open next year (see table). The Global LPG Storage Survey aims to provide the most comprehensive collection of larger LPG storage facilities currently available. With this in mind, those collecting and verifying the data have again expanded its scope, this time to more than 1,300 units with a combined capacity of 73.5mn t, up from under 1,300 and 68.9mn t last year, and from 1,120 plants in the previous survey in 2022. The latest survey also captures three new Indian facilities, one of which opened in 2024 and the other two are expected to open over the next few years. The first, now established, storage capacity is found at LPG trading firm Petredec's new 1.4mn t/yr Krishnapatnam import terminal on India's east coast, which opened in April. The terminal has two storage tanks that can store about 17,600t and 18,200t of propane and butane, respectively. The terminal has received nearly 60,000t of LPG since opening — 23,000t from Saudi Arabia on board the Al Maryah on 1 April and then 34,600t from Kuwait on board the Delma on 12 August, Kpler data show. Vote of confidence VLGC owner BW LPG and Indian LPG distributor Confidence Petroleum's joint import terminal project in Jawaharlal Nehru on the west coast of India is added to the project list. The terminal will be able to store 62,000t of LPG and discharge VLGCs when it opens, and while the project is still in its early stages, a prospective start-up of 2026 has been given. And Indian gas company Gail is developing the country's first PDH plant in Usar, around 40km from the Jawaharlal Nehru terminal. This project includes 60,000t of storage capacity to service the new plant, which is due to start up in 2025. Brazil's LPG imports are also on an upward trajectory, prompting it to invest in new terminal capacity. Should its Suape project see the light of day, another 71,000t of storage will be added. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Eurozone manufacturing slides deeper into contraction
Eurozone manufacturing slides deeper into contraction
London, 1 October (Argus) — The eurozone manufacturing sector slid further into contraction in September, when strength in Spain and Greece was unable to outweigh underperformance from other, larger, economies including France and Germany. The Hamburg Commercial Bank (HCOB) eurozone manufacturing purchasing managers' index (PMI) reading, compiled by S&P Global, was 45.0 in the month, a nine-month low. It was the first fall after three months of stability at 45.8. A PMI reading of below 50 indicates a deterioration. HCOB chief economist Cyrus de la Rubia noted a combination of falling demand and supply-chain constraints that were last seen during the Covid-19 pandemic. "Since June, the index tracking delivery issues has been dropping alongside new orders and for the first time since February, businesses are saying they are having to wait even longer for goods than they did in the previous month," he said. "The ongoing geopolitical tensions are obviously taking their toll here." Attacks on shipping in the Red Sea have lengthened delivery times to Europe from east of Suez, with many vessels taking the longer route around the Cape of Good Hope. Readings fell for production, new orders, employment and procurement, and producers depleted inventories. One bright spot for producers was the first fall in input costs since May, although selling prices also dropped. In the UK the S&P Global manufacturing PMI reading was 51.5 in September, a fifth successive month of expansion, albeit at a slower rate than the 52.5 in August. Output, new orders and suppliers' delivery times were "consistent with improved manufacturing operating conditions", while levels of employment and stocks of purchases declined. Input cost inflation was at a 20-month high, and the survey noted some caution ahead of the new government setting out its fiscal priorities on 30 October. By Ben Winkley Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Some eastern US rail shipments restart after Helene
Some eastern US rail shipments restart after Helene
Washington, 30 September (Argus) — Some railroad operations in the southeastern US have resumed in the aftermath of Hurricane Helene, but major carriers warn that some freight may be delayed while storm-damaged tracks are repaired. Rail lines in multiple states were damaged after Hurricane Helene made landfall on the northeastern Florida coast on 26 September as a category 4 storm and traveled northwards as a downgraded but still dangerous storm into Georgia, Tennessee, and the Carolinas. The storm left significant rain and wind damage in its wake, including washed-away roads, flooded lines, downed trees and power outages. Eastern railroads CSX and Norfolk Southern (NS) said they are working around the clock to restore service to their networks. Norfolk Southern said it had made "significant progress" towards its recovery with most major routes back in service including its Chattanooga, Tennessee, to Jacksonville, Florida, line as well as its Birmingham, Alabama, to Charlotte, North Carolina route. Norfolk Southern said freight moving through areas that are out of service could "see delays of 72 hours". Several of Norfolk Southern's other routes remain out of service, including rail lines east and west of Asheville, North Carolina, because of historic levels of flooding. There are multiple trees to remove along a 70-mile stretch from Macon, Georgia, to Brunswick, Georgia. And downed power lines are keeping the railroad's lines from Augusta, Georgia, to Columbia, South Carolina, and Millen, Georgia, out of service. CSX said "potential delays remain" but did not provide specifics. However, the railroad said it had made "substantial progress" in clearing and repairing its network. The railroad's operations in Florida have mostly reopened, as have rail lines in its Charleston subdivision, which crosses South Carolina and Georgia. But bridge damage and major flooding has kept CSX's Blue Ridge subdivision out of service. A portion of the line running from Erwin, Tennessee, to Spartanburg, South Carolina, has been cleared, but CSX said "a long-term outage" is expected for other parts of the rail line. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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