Leading consultancy for the oil & gas markets www.fgenergy.com Each month, FGE’s LPG Foresights report examines and assesses the volatile short-term market for LPG from a global perspective. In this publication, we track, interpret and forecast LPG supply and demand fundamentals to deliver clear, concise and insightful views on the fast-changing global LPG market.
The LPG trading market has become increasingly unpredictable and volatile since 2020. A series of events, including the COVID-19 pandemic, Storm Uri on the US Gulf Coast, and more recently the war in Ukraine, have impacted demand, trading patterns and prices.
Meanwhile, the USA, which is now the swing supplier of LPG to Asia and Europe, faces its own domestic supply and demand constraints, which are in turn affecting the US LPG price benchmark, Mont Belvieu. Separately, the Middle East, historically the LPG price-setter in Asia Pacific, is now having to compete against the USA to defend its traditional share of the key Asian market, while remaining constrained by OPEC+ crude output agreements and targets.
FGE’s LPG Foresights utilises a country-level, bottom-up approach to develop a regional understanding of global supply and demand dynamics. Our in-depth models integrate price-elastic demand areas, such as steam cracking, with our in-house view of price spreads and how these will affect swing cracking demand and import requirements.
On the supply side, we look at production and demand trends for each supplier in the Middle East in order to determine export volume trends. We examine the US market in depth, using data from various sources to arrive at monthly figures for exports and domestic inventory levels. This allows us to forecast the Asian pull on US and Middle Eastern LPG and to give our view on prices going forward. We also provide our latest insights and forecasts on shipping freight rates a fundamental factor when determining West-East arbitrage.