Weaker Oil, Softer Propane Prices? World’s Largest Container Shipping Group Raising Prices

Maersk Line, the world’s largest container shipping group, is raising prices due to increasing marine fuel costs, demonstrating how the surge in oil prices to their highest levels in four years is running through the global supply chain. Having a share of around 20% of seaborne freight, Maersk is a barometer of global trade, sending goods ranging from consumer electronics to food items worldwide.

Prices for bunker, as marine propulsion fuel is known, have risen more than 20% since the beginning of this year, and in Europe have reached $440 per metric ton, the highest since 2014. The Danish company’s shares have fallen as higher fuel prices hurt its bottom line, with oil prices having climbed on the back of concerns that Iranian output could drop, among other geopolitical supply threats. U.S. oil prices have also jumped to their highest level since 2014 as West Texas Intermediate, which is the second benchmark behind Brent crude, reached just above $74/bbl, its loftiest level since November 2014. Meanwhile, Brent rose to $79/bbl, but has now softened causing LPG prices to weaken.

Propane prices for large, fully refrigerated cargos are at $568 (U.S.) per tonne cif Amsterdam, Rotterdam, Antwerp (ARA), and butane is at $548 cif ARA. Both product prices have increased from June, by $28 per tonne for propane and $16 per tonne for butane. The coaster markets have been active with petrochemicals continuing to run hard on butane, pushing prices higher. A bit of demand from gasoline blenders has been observed, with the market remaining tight with low

stocks across Europe.

The latest indication of propane swap deals are: August 2018 $558-$562 per tonne cif Northwest Europe and September 2018 $557- $561 per tonne cif Northwest Europe. North Sea prices are at $526 per tonne fob North Sea terminals for propane and at $511.50 per tonne fob North Sea terminals for butane.

In the Mediterranean, propane and butane prices followed the crude and naphtha price increase, but there is no spot demand for surplus fob volumes. Prices for large, fully refrigerated cargos of propane are at $616 per tonne cif Lavera, south of France and at $559 per tonne cif Lavera for butane. Both fuels have increased, by $28 for propane and $15 for butane. Sonatrach, the national oil company of Algeria, fixed new contract prices for July at $530 per tonne fob Skikda and Bethouia for propane and at $540 per tonne fob Bethouia for butane. Propane hardened by $60 per tonne and butane gained $55 per tonne. Saudi Aramco negotiated new contract prices for July at $560 fob Middle Eastern terminals for both propane and butane.

Propane rose $60 per tonne and butane strengthened $55 per tonne. Examples of large shipping fixtures include the BW Thor, 82,323 cu meter capacity, has been chartered by Sietco (Shell International Eastern Trading Co.; Singapore) to load a full cargo of LPG from Ras Tanura for delivery options Chiba. The BW Sakura, 79,901 cu meter capacity, has been fixed by Sietco to load a full cargo of LPG from Ras Tanura for delivery options Chiba. The Mistral, 83,000 cu meter capacity, has been taken by Petredec (Bermuda) to load a full cargo of LPG from Ras Tanura for delivery options Chiba. The Yuricomos, 78,000 cu meter capacity, has been chartered by Vitol (Geneva) to load a full cargo of LPG from Ras Tanura for delivery options Chiba.

(SOURCE: The Weekly Propane Newsletter, July 30, 2018)