INDIA'S LPG WILL UP 10%
PLATTS - India's LPG imports are expected to rebound from July onwards and is on track for a 10% annual increase in the current fiscal 2017-2018 (April-March), after plunging to the lowest in two years in June, trade sources from four oil and gas companies in India said recently.
India, which is competing with China and Japan to be the world's largest importer of LPG, imported 597,000 mt in June, down about 25% year on year, the lowest since June 2015, data from India's Petroleum Planning and Analysis Cell, showed.
"India's domestic LPG production is not rising at the same pace as consumption; hence, imports will go up by at least 10% this fiscal," one of the trade sources said. The other trade sources agreed with his projection.
Domestic LPG production in April-June 2017 increased 0.2 million from April-June 2016, but domestic consumption over the same period rose 0.5 million mt, data published by PPAC showed.
Half of India's LPG demand last year was met by imports, S&P Global Platts data showed.
The June LPG imports were 20% less than the imports of 748,000 mt in May, as domestic production rose 10% from June last year to 1 million mt this June, PPAC data showed.
Traders also attributed the dip in June to healthy imports in the months before, which led to congestion at the ports.
Indian buyers looked to first dispose of their cargoes, due to the backlog of ships waiting to discharge at Indian ports, before taking in fresh imports.
"The ships standing in Indian ports for more than 15-20 days did not make economic sense", an Indian oil company source said.
India is one of the biggest buyers of butane in Asia.
The lower imports in June has led to a narrowing of the propane-butane in April when June cargoes were traded.
The propane-butane spread narrowed to minus $3/mt on April 26, the narrowest in eight months due to little demand for butane.
The spread was last narrower on August 1, 2016, when it was at parity, Platts data showed.
The propane-butane spread widened again to minus $26/mt on June 28, as buyers sought bargains for butane.
The recovering butane market had also prompted Saudi Aramco to set its latest contract prices for August with a wider propane-butane spread at minus $40/mt, as Indian buyers emerged before the market recovered further at the onset of the North Asian winter in Q4.
"[The] spread was quite low in June, so many people bought butane," a South Korean trader said.
The spot price of FOB Arabian Gulf butane came off from this year's peak of $611/mt on February 2 to $351/mt on June 23, the lowest in nine months.
The price for CFR Japan butane plunged from this year's high of $643/mt on February 2 to $374.5/mt on June 23, the lowest since September 29 last year.
The FOB Arabian Gulf and CFR Japan butane prices have since increased to $466/mt and $487/mt respectively, on Monday.
India's imports of LPG, which is mainly used for cooking, rose by 23% year on year in fiscal 2016-2017 to about 11 million mt, the PPAC data showed.
The propane-butane-mix in India's LPG consumption is now about even, compared to 60% butane and 40% propane in earlier.
In April 2017, India overtook Japan as the world's second-largest importer of LPG, as Prime Minister Narendra Modi pledged in May last year to provide cooking-gas cylinders to every household.
The Prime Minister's ambitious scheme, Pradhan Mantri Ujjwala Yojana, led to a record 31.6 million new cooking-gas connections during fiscal 2015-2016, Indian oil minister Dharmendra Pradhan said.
Total LPG consumption in India has increased for 46 months in a row, with a 15.9% rise in June from May, the PPAC data showed.