I’ve eluded to how the Asian market had lost its mojo in recent blogs, not unexpected at this time of year, but it’s thrown up a lot of questions as to what happens next. In yesterday’s blog we concentrated on the East/West spread, but today I need to answer where the U.S. / Asian ARB is heading.
There seems to be a cat and mouse game going on at the moment, its focus of attention is currently on one export terminal, but it is likely to shape the near-term LPG market for everyone. Who will win and who needs to win, well, we are about to find out? The summer is hot in Houston, it might get even hotter.
I’m currently sat in southern France having just watched some very exciting water jousting along the main canal in Sete, brought to the region by the ancient Greeks, while our eldest son and his two buddies have front row seats for the CS:GO “Esport” pro league final in Montpellier. I guess similar in that the aim of both games is to bludgeon each other, one with a surprisingly sharp stick, the other with an array of software simulated weaponry.
In part one of the Blog, I gave you a flavour of the incredible development of LPG in Indonesia, taken very much from my own unique perspective. I explained it was for strategic reasons that the contract was taken, but, why do traders see supply contracts with Pertamina in Indonesia through such rose-tinted glasses?
Nearly all contracts I’ve seen for LPG exports out of the U.S. Gulf are written as propane loadings, with a normal butane option, but only if declared by a certain date, and then limited to half the cargo. So, has butane been demoted to the role of “second-class” citizen in the relentless growth of U.S. LPG exports?
Although my main interest is to show the macro side of our business in the SIMON SAYS BLOG, now and then I like to keep you appraised of what individual countries are doing. After seeing Brazil’s goalkeeper Allison, you just have to love Brazilian names, performing brilliantly in the dull European Champions League football Final in Madrid on Saturday (soccer to those across the pond), it had to be Brazil!
I thought a bit of history might grab us on the last Friday in May. I remember selling butane cargoes into Marcus Hook, to Sun, to Sam Slovak or was it, Charlie Mitchell, anyway it was product going into their refinery for gasoline blending. They weren’t regular buyers, but paid good prices, and getting the first sale in was always a feeling of achievement.
I do like hearing the discussions on how there’s record production, record exports and a lot more to come but I do feel the debate then tends to deviate to where LPG is going not how it’s getting there. Huge investments are being made to produce crude oil and natgas, without doubt the NGLs are being extracted for commercial reasons, but increasingly the talk has been about takeaway, I even heard “we’ve just got to make it disappear”.