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South China's LPG prices rebound as buyers replenish stocks in region
DateTime: 2015-7-22 13:01:36    

The prices of both imported and domestically produced LPG rebounded in South China this week, supported by an increase in demand from third-tier LPG distributors, trader sources said Friday.

Many third-tier LPG distributors were said to have emerged to replenish their inventories since early this week, encouraged by weaker domestic LPG prices.

Domestic LPG prices had approached two-month lows, and the imported grade even sold below its import cost in South China last week, which local sources said spurred buying interest this week.

Both imported and domestically produced LPG had fallen by around Yuan 750-Yuan 800/mt ($122.57-$130.74/mt) or 18%-19% in South China last week, compared with the traded levels seen in mid-April, Platts data showed.

In China's southern Guangdong province, imported LPG cargoes of mixed propane and butane traded at around Yuan 3,450-Yuan 3,550/mt in the wholesale market this week, up by around Yuan 100/mt from the previous week, local traders said.

"Asian LPG prices seem to have stopped falling this week, which is expected to have supported the domestic market sentiment in the short time, as well as encouraging some buying interest from the distributors," said a market source.

"Besides, limited imported LPG cargoes had arrived in the region in the recent two weeks, which is believed to have also underpinned LPG prices," the source said.

Only three refrigerated LPG cargoes, totaling around 66,000 mt, had arrived in Guangdong province this week, compared with no imports the previous week, according to shipping data from Beijing-based energy information provider JYD Commodities Hub.

Supported by higher prices of imported LPG, Sinopec's Guangzhou, Maoming, Zhanjiang refineries and CNOOC's Huizhou refinery were said to have also raised prices of domestically produced LPG by around Yuan 100/mt this week, on the back of increased buying activities.

Domestically produced LPG was said to have traded at Yuan 3,400-Yuan 3,500/mt in the region, also up around Yuan 100/mt from last week, according to trader sources.

But buying interest were said to have turned thin Friday as many traders remained bearish over the market in the near term due to weak seasonal demand and ample supply.

E CHINA PRICES RETREAT AFTER EARLY-WEEK RISE

In eastern China, LPG prices were volatile this week, with price rebounding earlier in the week due to higher demand but then retreating Friday when buying activity stopped, according to local traders.

Sinopec's Jinshan, Gaoqiao, Yangzi, Jinling and Zhenhai refineries in the region cut prices of domestically produced LPG by around Yuan 100-Yuan 200/mt Friday, erasing the increase in earlier this week, according to local traders.

As a result, domestically produced LPG was said to have traded around Yuan 3,650-Yuan 3,750/mt in the region Friday, unchanged from last week.

Imported LPG cargoes of mixed propane and butane were said to have kept pace with domestic LPG prices, trading at around Yuan 3,675-Yuan 3,775/mt Friday, unchanged from last week, traders added.

Traders had the same bearish near-term outlook for East China: ample supply and weak seasonal demand.

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