The black swan events of 2020 have radically transformed the energy markets including LPG global supply/demand and trade. After the recent decision from OPEC+ to curb crude oil production by 9.7 mmb/d, the global LPG trade expectation for 2020 transformed once again, with less LPG available for exports which in turn is expected to destroy demand further. NGLStrategy has updated the view of global LPG exports following two recent updates in December 2019 and March 2020. Based on this:
- Steam cracking remains one of the key swing factors – with lower supply, prices are expected to remain firm decreasing propane’s advantage as a feedstock vs naphtha. Overall demand will reduce in steam crackers particularly in N. Europe
- Additional drop in retail demand expected both east and west due to COVID-19.
- Some retail markets typically dependent on Middle East supply may not grow as expected due to lower export availability.
- PDH demand is not expected to change significantly from NGLS’ previous update as on-purpose propylene is anticipated to be needed based on estimated propylene demand.
NGLStrategy has updated it’s 2020 view on global LPG trade expectations as crude oil production is curbed from May onwards. With less LPG available for exports both East and West, demand in some sectors is expected to be destroyed. Which sectors, the level of reduction in Middle East and US exports and the resulting influence of such cuts on pricing and shipping are explored in our April Market Update report.
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