It’s looking as if it’s been another one of those weeks in the LPG world, where defining a forward view of the market could go one of many ways, and the backcloth is an ARB market that initially headed south but has now regained some broader momentum. In today’s SIMON SAYs I’ll take a look at what the key indicators are up to, and what has happened to them over the last couple of weeks, to see if there’s a clearer direction going forward, as cargoes are starting to be talked for the January 2020 arrival period in Asia.
However much we like to try to put crude oil and natural gas prices in the back of our minds, mainly because none of us really know enough about them, they are still the catalyst for what happens next in the LPG space. Today I explore what’s probably going on in the heads of those oil and natgas players, as they assess what’s going to happen next, and what will be the driving forces. Whether it tells us any more than we already know, or directs us in a certain path on LPG, well we have to wait till I get to the end.
In yesterday’s SIMON SAYS I told the post shale story for U.S. LPG exports, especially those from the U.S. Gulf coast, and how once everybody had signed up to buy at high terminal fees, the bottom suddenly caved in on the market in the summer of 2016, and it was here to stay for longer than anyone ever wanted. The result was that Chinese end-users began to cancel, or try to renegotiate their term contracts, as they could take advantage of cheaper Middle East product and discounted naphtha. That’s putting it kindly, what was really happening was wholesale reneging!
In yesterday’s SIMON SAYS, I looked for the reason why we’re still seeing announcements of PDH expansions and new olefin crackers in the U.S., especially given the reality of China’s plans to stand by themselves in the petrochemical world, increasing their domestic production of petrochemicals while cutting back on imports of olefins, such as ethylene and propylene, and also the polymers, the resins and fibers.
It has to be over twenty years ago since I last set foot in Taiwan, and I must have met with both CPC and FPC, but my memory pretty much stops there. I do, though, remember visiting a company called LCY Chemicals, I don’t think they have been featured in the LPG import business into Taiwan since, but they did have an import facility in Zhenjiang, China, but only for smaller pressurised LPG cargoes.
In the last 10 years imports have jumped from 2.5 million Mt to over 12 million Mt today, but the early imports were in smaller cargo sizes as the import terminals were pretty spread around the country’s coastline, near to major cities, with a slant to the west coast given its proximity to Middle East supplies.
The first sanctions against Iran were imposed by the U.S. back in November 1979, following the seizure of the American Embassy in Tehran and hostages by radical students. This was the start of a number of sanction targets in and outside of Iran. Over the years the sanctions have taken a hefty toll on the Iranian economy and its people. They have been the cornerstone of U.S.