Liquefied petroleum ges

Liquefied Petroleum Gas (LPG) Recent Commodity Market Intelligence, Analysis, and Forecast

I. Market Intelligence
(A) Price Data
1. Domestic Benchmark Price: According to Shengyishe data, the LPG benchmark price on July 27 stood at RMB 6,375.00 per ton, representing a 22.18% increase from the beginning-of-month level of RMB 5,217.50 per ton and reaching a one-year high; however, by July 29, the benchmark price declined to RMB 4,750.00 per ton—a 3.5% decrease from the beginning-of-month level—with a daily decline of 0.26% and marking a one-year low.
2. Futures Prices: Per mobile Jintouwang data, on July 24, the closing price of the LPG main futures contract was RMB 5,807.00 per ton, with an intraday high of RMB 5,753.00 per ton and a low of RMB 5,676.00 per ton; the day’s settlement price was RMB 0.00 per ton, and the average price data were unavailable. The latest weighted contract price for LPG stood at RMB 5,659 per ton, down RMB 60 per ton (-1.0%).

(B) Import Data
1. Import CIF Price Index: From July 13–19, China’s comprehensive import CIF price index for liquefied propane stood at 133.13 points—a 7.73% week-on-week decline and a 10.44% year-on-year increase; the corresponding index for liquefied butane was 123.69 points—a 17.24% week-on-week decline and a 10.33% year-on-year increase.
2. Saudi CP Prices: Saudi Aramco announced its July 2026 propane price at USD 580 per ton—down USD 180 per ton month-on-month and up 0.87% year-on-year; its butane price was set at USD 600 per ton—down USD 220 per ton month-on-month and up 10.09% year-on-year.

(C) Supply-Demand Data
1. Supply Side: From July 13–19, domestic LPG import arrivals totaled 715,000 tons—up 65.89% week-on-week, predominantly in South China; domestic LPG output from local refineries rose 2.36% week-on-week, resulting in an overall weekly supply increase.
2. Demand Side: Civil consumption (cooking/heating) remained sluggish; chemical demand increased—specifically, PDH (propane dehydrogenation) plant operating rates rose in the propane deep-processing sector, boosting propane-based chemical demand; in the butane deep-processing segment, MTBE (methyl tertiary-butyl ether) plant operating rates declined while alkylation unit operating rates rose, leading to net growth in butane-based chemical demand.

(D) Related Market Developments
1. Crude Oil Market: As of July 17, the settlement prices for Brent and WTI crude oil futures front-month contracts stood at USD 88.10/barrel and USD 81.78/barrel respectively—up 15.91% and 14.63% week-on-week. Multiple bullish factors—including escalating geopolitical tensions, a sharp drop in shipping volumes through the Strait of Hormuz, heightened risks in the Bab el-Mandeb Strait, and U.S. crude inventories falling to historic lows—drove significant crude oil price gains.
2. International LPG Market: The temporary U.S.-Iran ceasefire agreement collapsed, prompting renewed closure of the Strait of Hormuz; ship-to-ship (STS) loading operations in the Middle East contracted, intensifying supply-constriction concerns and triggering rapid external price increases. Although spot demand for August shipments has been largely met and procurement pace has slowed, healthy PDH margins in China continue to afford importers purchasing room. Meanwhile, improved butane cracking margins have boosted spot trading volume, sparking short-term buying frenzies.

(E) Policy and Regulatory Updates
The Baishui County Market Supervision Administration of Shaanxi Province launched a special inspection campaign across the county targeting LPG pricing practices, rigorously cracking down on all forms of price violations to foster a fair, transparent, and orderly market pricing environment.

II. Analysis and Assessment
(A) Causes of Price Volatility
1. Short-Term Upside Drivers: From early to mid-July, escalating geopolitical conflicts sharply lifted international crude oil prices, strengthening global LPG markets. Concurrently, robust PDH margins in China spurred active import procurement, while increased spot trading volume in the butane segment reflected heightened demand—resulting in simultaneous supply and demand growth, though demand growth outpaced supply growth, pushing prices upward.
2. Short-Term Downside Drivers: In late July, domestic supply surged while civil consumption remained lackluster. Although chemical demand expanded moderately, aggregate demand growth failed to absorb the supply increment, shifting the supply-demand balance and exerting downward pressure on prices.

(B) Current Supply-Demand Dynamics
Domestic LPG supply is trending upward, with sharply increased import arrivals and modest growth in domestic production. On the demand side, civil consumption remains weak; although chemical demand shows incremental growth, it cannot fully offset the supply expansion—leading to an overall loose supply-demand situation.

(C) Impact of International Markets
Geopolitical conflict significantly influences the international LPG market: supply-constriction fears arising from regional instability have driven external prices higher. However, as spot demand for near-term shipments becomes saturated and procurement slows, fundamentals—including supply-demand dynamics—will increasingly dictate price direction. The substantial month-on-month decline in Saudi CP prices exerts downward pressure on both international and domestic LPG pricing levels.

III. Forecast
(A) Price Trend Outlook
In the short term, LPG prices are likely to remain range-bound at low levels or experience modest further declines. Sustained supply growth—coupled with seasonally weak demand during summer—will maintain a relatively loose supply-demand balance, suppressing prices. Looking ahead to the medium term, demand is expected to strengthen in Q4 as colder weather boosts residential heating consumption, and stable or growing chemical demand could support price recovery.

(B) Supply-Demand Evolution
On the supply side, domestic refinery maintenance seasons are anticipated to conclude in H2, enabling further growth in commercial-grade domestic LPG output. With ample international LPG supply and favorable pricing, importers may increase procurement volumes, potentially lifting import quantities. On the demand side, civil consumption will remain subdued in Q3 due to seasonal weakness but should rebound in Q4—the traditional peak season for both residential heating and chemical feedstock usage—thereby supporting overall market activity.

(C) Market Risks
Geopolitical tensions remain the dominant risk factor. Further escalation of Middle Eastern conflicts could disrupt international LPG supplies and drive prices upward; conversely, de-escalation would ease supply constraints and likely depress prices. Additionally, volatility in crude oil prices and potential domestic policy adjustments may also materially impact the LPG market.