U.S. halts LPG shipments to Asia amid storm havoc; buyers hold back

SK Gas

31/08/2017 10:26

* Harvey delays at least 300,000 T of U.S. LPG shipments 
    * Off-peak season for heating helps mitigate impact of 
delays 
    * No inventory shortages emerging yet in Asia -buyers 
 
    SINGAPORE, Aug 31 (Reuters) - Shipments of liquefied 
petroleum gas (LPG) from the United States have been held up by 
the havoc wrought by tropical storm Harvey since last Friday, 
but Asian buyers are betting the situation will improve before 
supplies are critically squeezed.  
    At least 300,000 tonnes in LPG shipments to Asia have been 
delayed after U.S. Gulf ports were shut, based on the estimates 
from four sources who buy mainly U.S. cargoes.  
    Asia is short of LPG, which in the form of butane or propane 
is used for transportation, heating, cooking and petrochemical 
production. Based on IHS Markit data, Asia imported close to 53 
million tonnes of LPG in 2016, with about 66 percent coming from 
the Middle East and 22 percent from the United States.  
    Prices reacted swiftly to the U.S. delays, with Saudi Aramco 
on Aug. 28 setting its September contract prices for propane at 
$480 a tonne and butane at $500 a tonne. These were up $40 to 
$60 a tonne from July and also Saudi Aramco's highest monthly 
prices since March.  BUT-OFFCL-SA   PRO-OFFCL-SA   
    "Middle Eastern players should at the very least be able to 
sell some additional volumes from stock in the current 
environment and cash in on the rising price," said JBC analyst 
Michael Dei-Michei.  
    Still, this being an off-peak season for LPG in the heating 
sector has helped to mitigate the impact, said a North Asian 
buyer of U.S. cargoes.  
    "There have been delays in shipments (but) it's summer now. 
We do not foresee any worries over inventory shortages," he 
said.  
    Japan, South Korea and China are Asia's top consumers of 
LPG. Major buyers include Japan's Astomos Energy, South Korea's 
SK Gas  018670.KS  and China's Oriental Energy  002221.SZ .  
    Another buyer of U.S. cargoes said September inventories 
were comfortable for now, but that the situation could change.  
    "There are already some 15 carriers including Very Large Gas 
Carriers (VLGCs) being delayed. If this drags, more ships would 
be delayed and it could affect October inventories," the second 
buyer said.  
    As of Wednesday, the upper Houston ship channel from 
Morgan's Point inbound to the turning basin remained closed 
although the smallest draft tankers would be allowed to travel 
to Texas City.  urn:newsml:reuters.com:*:nL2N1LH04H      
    "If U.S. cargoes are (further) delayed or cancelled ... 
(buyers) can turn to the Middle East or West Africa, but I don't 
think the volumes will be enough," said a Singapore-based 
trader.  
 
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GRAPHIC: Saudi LPG prices    http://reut.rs/2wjRV0o 
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 (Reporting by Seng Li Peng and Jessica Jaganathan in SINGAPORE, 
Jane Chung in SEOUL and Osamu Tsukimori in TOKYO; Editing by Tom 
Hogue) 
 ((lipeng.seng@thomsonreuters.com; +65 6870 3086; Reuters 
Messaging: lipeng.seng.thomsonreuters.com@reuters.net)) 
 
Keywords: LPG ASIA/SUPPLY