US LPG suppliers lost market share in Brazil to imports from Argentina despite a decline in US Gulf coast propane and butane prices.
Brazil imported 982,240t of LPG year-to-date October this year, Vortexa data shows. Argentinian supplies comprised 49.5pc of Brazil's imports at 486,400t for the 10-month period, up 17.8 percentage points from a year earlier. Brazil took 47.2pc of its LPG from the US at 463,700t year-to-date October, down by 18.3 percentage points from the same period a year earlier.
Brazil's shift toward Argentinian-sourced LPG comes even as prices decreased for full-propane and split butane/propane cargoes loading at the US Gulf coast. US propane export cargo prices slid to $429.1/t year-to-date October this year, from $487.7/t in the same months a year earlier. US split butane/propane loaders dipped to $442.8/t from $499.2/t in the same time period. Brazil's shift away from lower priced US supplies suggests Argentinian cargoes may be more price competitive.
Part of the price competitiveness may stem from more economically favorable freight rates for short-haul distances given Argentina's geographical advantage that allows Brazil to offtake Argentina's growing LPG supplies.
Brazil may continue to import more LPG from neighboring Argentina as domestic demand there is expected to grow between 5-8pc with the government's incoming Gas do Povo subsidy scheme, according to LPG association Sindigas president Sergio Bandeira de Mello. The subsidy scheme will distribute vouchers for free LPG cylinders to more than 15mn qualifying low-income homes in remote areas of Brazil in an effort to push families away from cooking with firewood and charcoal.
The country's four main distributors — Copa Energia, Nacional Gas, Supergasbras and Ultragaz — account for nearly 90pc of the domestic market and have already confirmed that demand under the program will be met by LPG imports. This will come from countries other than the US, most notably from nearby Argentina.
