Summary
While most propane benchmarks strengthened into the end of April but sold off into the new month, the June’25 C3 CP contract (Saudi Aramco propane) has shown more resilience. The Jun’25 tenor of the Middle Eastern propane benchmark climbed from $558/mt on 25 Apr to $571/mt on 1 May, where it remains at the time of writing on 7 May, despite briefly meeting resistance at this level. Saudi Aramco announced the May’25 C3 and C4 CP settlement prices at $610/mt and $590/mt, respectively, significantly above the contract’s market level. This further supported the C3 CP complex, with majors and trade houses buying over 1.1mb of the Jun’25 flat price from Onyx in the week ending 6 May.
This strength in C3 CP may have pressured the differential between the Far East Propane Index (C3 FEI) and C3 CP (C3 FEI/CP). The Jun’25 C3 FEI/CP climbed from -$50/mt on 23 Apr to -$22.50/mt on 25 Apr, before selling off to -$70/mt at the time of writing on 7 May. While trade houses and majors were seen buying the Jun’25 FEI/CP diff this fortnight, the Jun’25 C3 FEI contract saw 855kb of net selling from a variety of speculative and hedging players at the same time, with trade houses selling 235kb of this position.
Finally, the Jun’25 Mont Belvieu TET propane (Energy Transfer) contract, C3 LST, climbed from 72.50c/gal on 23 Apr to a peak of 76.875c/gal on 29 Apr but weakened to 70.125c/gal at the time of writing. Open interest in the Jun’25 C3 LST dipped from 33.6mb on 30 Apr to 32.8mb on 2 May, hinting at longs exiting the market. Onyx’s 90-day entry-level assessments confirm that longs were out of the money after 30 Apr, highlighting that these players may have exited to cut their losses. Finally, we now see further sell-side pressure in the M1 C3 LST following a 970kb build in US propane inventories, most of which was concentrated in the US Gulf Coast. Nonetheless, it is worth noting that PADD-3 stocks remain 10% below their 5-year average.
