I had to write a SIMON SAYS on the LPG industry in Spain, especially as I’ve just got back from Ibiza, although not on the mainland, it is very much Spain, with Paella, Serrano ham, and okay, with just a bit of hippie and house music influences added. The picture in fact is the Spanish chef we used to cook Paella, his name had to be Ignacio, and his flair for cooking reminded me of a similar flair for trading associated with his LPG namesake.
Labor Day is pretty much over, and there are maybe 6-7 weeks left of what my American colleagues call the injection season for U.S. propane inventory. It could well be a very crucial period for the U.S. propane market, and for that matter the whole international market structure. I’m trying to gauge whether we are really going to see U.S. structure continue to gain ground on its co-markets especially in Asia, but Europe as well.
The summer holiday clothes, the sun cream and photos, are now all destined for the physical and electronic storages, the kids are back, or going back, to school (hooray!), the northern hemisphere nights are drawing in, Love Island is but a dream and those winter TV series are all about to re-start! The structure of our lives is therefore about to change, so why not the structure of the LPG market?
When I look at history it shows me how we take for granted the way we act in today’s world, but it also shows me how much markets evolve. My goal is not to academically narrate or verify what did or did not happen, but to give you a sense that LPG wasn’t just the cast-off side of the petroleum business, that it actually had a life of it’s own.
There’s not really a similar sector anywhere in the international oil and gas industry that performs the same role as the “midstream” does in the U.S. market. I can remember my mother would irately say, when I interrupted her for some reason, “don’t stop me in midstream”, otherwise it wasn’t a word often used in the Hill household.
I’ve been in this business for a very long time now and it probably makes me start taking things for granted – that’s certainly been the case for the Saudi Aramco Contract Pricing (CP) and its influence on Middle East suppliers and their homes in the East. So, will we see a fundamental change in the way LPG is priced in the Middle East, and if so, when? How many times has that question been asked?
In yesterday’s SIMON SAYS I explained the slightly more conventional relationships between motor gasoline and normal butane, as time fast approaches when the winter gasoline vapour pressure specification kicks-in, but as always, it’s in a market where the supply and demand factors are competing with each other to set new equilibriums, impacting prices along the curve.
I’m on day five of the Hill family summer vacation in Ibiza. The beautiful villa is up in the hills close to Saint Miquel, if you know the island, or maybe you can only remember entering the Pacha and Amnesia nightclubs, certainly the second club is aptly named! Anyway, the days of partying are a distant memory, and I can also hear a lot of you saying, “wasn’t Frank Sinatra his era”.
My Friday versions of SIMON SAYS are fast becoming the more relaxed side of my views on the LPG market, hopefully a little bit of fun, some nostalgia and soon some views on LPG, and life in general, from some of the galacticos of our industry. The nostalgia so far has been limited by how far I go back in the industry, which is to the very early 1980s, way back to some, not far enough to others.