Surplus global LPG stocks to continue through 2019
Published by Tom Mostyn,
The end-winter transition from draws to builds in US propane stocks is arriving early, according to ESAI Energy’s newly published Global NGL One Year Outlook. As it describes, the global LPG market will remain in surplus in 2019, resulting in stock builds and wide propane and butane discounts to naphtha. The implications range from the negative impact on petchem demand for naphtha in Asia and Europe to the likelihood of propane and butane stranded in the Gulf Coast pricing into the US petchem feed slate.
As ESAI’s one-year outlook describes, for US propane and propylene stocks to be basically unchanged from February to March breaks with the past two years when the March-on-February draw was as high as 5 million bbl. Traditionally, propane stocks bottomed out late in the first quarter toward the end of the heating season, when supply begins to overwhelm demand. The early arrival of this year’s rebuilding season reinforces ESAI’s bearish outlook based on its bottom-up country-by-country projections of the global LPG balance.
“Given these dynamics in US inventories and global fundamentals, the widening of Asian spot propane and butane to naphtha is exactly what we expect this year,” explains ESAI Energy Head of NGLs, Andrew Reed. “The lack of pressure on U.S. stocks reinforce what ESAI Energy’s global balance predicts, which is that in 2019 the global market will be unable to absorb excess US LPG.”
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/29032019/surplus-global-lpg-stocks-to-continue-through-2019/
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