LPG
The story in propane has been dominated by the Panama Canal story and limited US exports, leading to strength in internationals. The LST/FEI saw further pressure over the past two weeks, falling to -$245/mt in the prompt. These lower levels could be attractive for importers and may lead to increased buy-side hedging flows.
FEI and CP both saw a strong performance with flat price well supported. The main driver of strength is supply tightness concerns, with US export capacity seemingly maxed out. The FEI/CP saw heightened volatility, whilst CP has held its strength in the front on the back of Chinese importer buying. DCE buying have also been supportive of FEI spreads in the prompt.
Open interest shows substantial market interest in the propane complex, with levels for the major benchmarks exceeding their 5-year average. Market risk is currently concentrated in the Q3 LST, which is a flashpoint for global propane market fundamentals and supply/demand dynamics.
EIA stats indicated continued builds in US propane inventories. Notably, US propane exports reached their highest level recorded, with a 4-week average of 1.9mbpd in the week to May 10.
