Indian LPG Demand Bounces Back in December After Falling

Indian LPG demand bounced back to a new high in December after falling to an 18-month low just a month earlier, reports ESAI Energy. While the December recovery signals that Indian demand will not collapse, the broader trend confirms a deceleration of the country’s demand growth, the consultancy
maintains.

The year-on-year growth of India’s LPG demand slowed from 60,000 bbld in the first half of 2018 to just over 20,000 bbld in the second half of last year. Demand growth would have been higher were it not for the reaction of Indian buyers to recent price fluctuations. Buyers who qualify for the nation’s subsidy program pay the full price and are reimbursed, so the market price influences their purchase, too, ESAI Energy notes. Domestic prices shot up to a new high in November even though international prices fell. The collapse of demand in November, followed by a recovery in December, suggests buyers figured out that they could pay a lower price if they put off refilling cylinders until December. In fact, the latest data show monthly demand bounced back from an 18-month low in November to a new high.

“December’s jump in demand is reassuring for overall Asian demand growth since India is a key driver of Asian growth,” said Andrew Reed, ESAI Energy’s head of global NGLs. “Nevertheless, its demand growth will slow in 2019. For overall Asian demand, and hence U.S. LPG exports, the other key driver is China, where demand will accelerate on the back of a new wave of PDH investment.”

(SOURCE: The Weekly Propane Newsletter, January 28, 2019)