US and global LPG markets will remain partitioned until new export capacity enables more North American product to reach Asia and other markets, according to ESAI Energy’s newly published ‘Global NGL 12-month Outlook.’
The re-linking of North America and the global market has bullish implications for Mont Belvieu NGL prices and US export volumes.
The impact of the temporary partitioning of markets is evident in both prices and inventories, according to ESAI Energy’s new report. Due to a scarcity of US product in overseas markets, inventories in Japan, South Korea and Taiwan are at unusually low levels, almost 7 million bbls less compared to a year ago. Simultaneously, US propane inventories are soaring. Consequently, Mont Belvieu propane has been trading at a US$15 discount to Japan spot prices, just US$19/bbl. As ESAI Energy describes, this partition will last until Enterprise commissions new terminal capacity in the third quarter.
“The current situation resembles the period prior to 2016 when US NGL prices were suppressed due to a lack of LPG export infrastructure,” explains ESAI Energy Head of NGLs, Andrew Reed. “The markets will re-link quickly, however, once Enterprise’s new terminal begins operating. Then, LPG exporters’ fortunes will hinge on the fragility of global demand growth.”
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/01072019/mont-belvieu-propane-and-butane-prices-to-climb/