Saudi Arabia's state-controlled Saudi Aramco has set its August contract price (CP) for propane at $365/t, up by $5/t from the previous month.
The August butane CP was raised by the same margin to $345/t, maintaining the $20/t discount to propane from the previous months of June and July.
Aramco set the discount for term customers loading from Yanbu at $6/t, up by $1/t from $5/t in July.
The higher August propane CP met with mixed reactions from the market, as August propane CP swaps were trading in a wide range of $369-389/t in the week prior to the announcement of the CP. The first round of CP recommendations from term customers were in a $350-400/t range for propane and $330-400/t for butane. The second round of CP recommendations from term customers were lower, in a range of $340-390/t for propane and $320-390/t for butane. Many term customers had recommended that Aramco set the butane CP at a $20/t discount to the propane CP.
A persistent fall in demand for evenly split cargoes has flipped the propane-butane CP differential from a discount to a premium since mid-April. August propane-butane CP swaps differentials were assessed yesterday at +$19/t.
Mideast Gulf producers such as Aramco are expected to have increased crude and LPG production after ending their voluntary crude output cuts, which were above those required by the Opec+ agreement. But extra supplies may struggle to find outlets with limited demand for spot volumes and high inventories in India and south China.
Spot availability of either 33,000t+11,000t or 22,000t+22,000t cargoes from suppliers in the Mideast Gulf and Africa for August loading has also kept butane values below that of propane.
The Argus Middle East Index (AMEI) for cargoes loading over 21-31 August was yesterday at $330/t and $311/t for propane and butane respectively.
