In yesterday’s SIMON SAYS we were trying to work out why propane in Enterprise’s Non-TET system was taking such a bashing. It’s amazing that the same product, in pretty much the same place, is being bought and sold at such a discount, one that’s nearly been as high as 20%!
The British Prime Minister Harold Wilson, in the early 1960s, was attributed with the phrase, “a week is a long time in politics”, I think the catchphrase could well be applied to the week we’ve just seen in the LPG world! It’s not that it’s been a dramatic turnaround, it’s more that the market is less predictable than we thought or expected.
I’m just flying over Newfoundland, Canada on my way back from what’s becoming my second home now - Houston, Texas. I don’t know if you do it when you’re flying, but I tend to think-back on my life, well that is, ever since I stopped flying with a hangover after a big night out doing the compulsory “smooching” with clients. I certainly don’t miss those days, or do I?
In Friday’s SIMON SAYS I talked about the move in Asia, away from the relative rigidity of the Saudi Aramco Contract Price (CP), and more towards greater spot pricing, especially as supplies are increasingly related to both Mont Belvieu and Far East Index (FEI) price indices. We know that the majority of cargoes will head to Asia, but what drives cargoes at the margin to seek a buyer in North West Europe, especially when originating from the U.S.?
Every time I keep looking at U.S. production numbers growing, or I hear the latest from Jim Teague announcing another export capacity expansion out of Enterprise’s LPG terminal in the U.S. Gulf, I get a bell ringing in my ear to remind me to question where all this new LPG will end up going. I know logically that additional U.S. production will find a home somewhere, as all incremental production does.
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.
We’ve had quite a few famous people come over to our beach restaurant on the Isle of Wight, I won’t name drop, well, there’s maybe one that recently grabbed my eye that I want to mention. Sat enjoying the view, and the hopefully the food, was Sir Jim Ratcliffe, head of Ineos, one of the world’s largest chemical producers.
I’m just squeezing into my morning suit and putting on my top hat, as we head off for our annual Royal Ascot, day at the races. Usually I’m going thinking, how far under 90% of naphtha will the petrochemical buyers push the propane market in Europe, or will our customers try to push dates back again or isn’t it time for buyers to start stock building at the bottom of the market.