Summary
Overview
Major propane benchmarks recovered, partially, at least, this fortnight as the market digested the tariff news and there were better fundamentals out of the US. The huge sell-off at the start of the month was mostly due to the collapse of Far East propane Index (C3 FEI). This fortnight, the moves in FEI were largely dictated by CP prices, which have been supported by the potential propane tightness in the Middle East.
The C3 FEI/CP differential remains in the negatives although it has recovered to -$55/mt before softening again to -$81/mt, with trade houses and majors building net length. Conversely, trade houses flipped short on the front FEI spread. The FEI/MOPJ differential rebounded from a low of -$140/mt to -$60/mt, with rising open interest and majors buying, though hedge funds sold slightly. Freight rates recovered, with Middle East–Japan (BLPG1) rising from $39/mt to $50/mt, and USGC–Japan (BLPG3) climbing from $91/mt to $100/mt by April 22.
May’25 US Mont Belvieu TET propane contract (C3 LST) fell below $57/gal on April 9, then rebounded to $76/gal by April 23 before softening slightly. Trade houses sold heavily, while end users and midstream players bought the rebound. The front spread rallied to 1.75c/gal, though it’s now hitting resistance. Meanwhile, the C3 LST/FEI arb hit a low of -$138/mt mid-month, recovering modestly to -$119/mt, with majors and trade houses buying into Q3 and Q4 arbs.
Storage data from the EIA showed a 2.3mb propane build (week ending April 18), reversing the prior week’s 1.3mb draw, mostly from PADD-3. Exports have increased for three weeks, hitting nearly 2 mb/d.
