Saudi Aramco sets March term propane CP at $625/mt, butane at $595/mt

Singapore — Saudi Aramco set its March propane term contract price at $625/mt, up $20/mt from February, and butane CP at $595/mt, up $10/mt versus February, the company said Feb. 28.

The propane CP was set at the high end of traders' expectations of between $590/mt and $625/mt, though butane was set in the middle of expectations between $590/mt and $600/mt.

The March CPs are the ninth straight monthly increase for propane, and the eighth rise in a row for butane.

The March CP propane swap closed Feb. 26 at $619/mt, with butane valued $28/mt below that.

The higher March CPs came as Saudi Aramco announced acceptances of term LPG nominations for March loadings, with trade sources mixed on whether there were cancellations or delays and the volumes to be exported.

Some sources said there were no cuts or delays for March, estimating Saudi exports at above 550,000 mt, though not more than 600,000 mt. But others said there were cancellations of five to six cargoes, limiting total exports to around 520,000 mt.

Even at 600,000 mt, March exports are lower than before the voluntary Saudi Arabian crude production cuts, which shows there might have been cancellations to the nominations, trade sources said.

Saudi Aramco's LPG exports across the year were around 7.9 million to 8.1 million mt -- or a monthly average of 667,000 mt -- before it decided on the crude cuts, according to market estimates.

Sources said the mixed view on March acceptances could also be attributed to lifters and Saudi Aramco having agreed in advance on the volumes, even as acceptances of February nominations saw Aramco canceling cargoes nominated by seven to eight lifters, following Saudi Arabia's decision at the Jan. 5 OPEC+ meeting to cut oil output by 1 million b/d in both February and March.

Sources said overall Saudi Aramco's propane supply was tight, as the product is fed into the kingdom's petrochemical plants. But propane's tightness should ease from April, when the kingdom is expected to restore production, if it is confident that crude prices would not fall further, sources said.

Aramco had set the propane CP for March 2020 at $430/mt and butane at $480/mt, S&P Global Platts data showed.

Aramco's CPs -- which set the price of propane and butane lifted from the Saudi Arabian ports of Yanbu, Ras Tanura and Ju'aymah under term supply contracts -- are closely watched by the market as they tend to set a base level for pricing in most markets east of Suez.