In March, the domestic LPG (Shandong) market was greatly affected by the crude oil slump, mainly following the decline. At the beginning of the month, the average price of the domestic LPG was 3,700 RMB/ ton, and at the end of the month, the average price was 2,706.67 RMB/ ton, with a drop of 26.85% in the price within the month, 32.28% lower than the same period last year.

Analysis of Influencing Factors

In March, the price of domestic LPG market dropped significantly. As of March 31, the export price of Guangzhou Petrochemical LPG was 2,400 RMB/ ton, Jingmen Petrochemical LPG was 2,700 RMB/ ton, Shanghai Petrochemical LPG was 2,470 RMB/ ton, Gaoqiao Petrochemical LPG was 2,450 RMB/ ton, Qingdao Petrochemical LPG was 2,500 RMB/ ton, Shandong Jincheng Petrochemical LPG was 2,820 RMB/ ton, Shijiazhuang Petrochemical LPG was 2,700 RMB/ ton. The factory price of Luoyang Petrochemical LPG was 2,750 RMB/ ton.

International crude oil: in March, according to the data monitored by SunSirs, WTI crude oil fell by 57.34% and Brent crude oil by nearly 50%. The oil price collapse is naturally one of the "black swan" events in 2020. There are two main reasons: the sharp reduction of global demand caused by social and public events, and the supply risk caused by the "price war" of Russia and Saudi Arabia to increase production.

In April, the trend of LPG was mostly affected by the collapse of international crude oil, and the market trend fell sharply. At the beginning of the month, although the CP price fell in March, it fell less than expected, which brought certain benefits to the market. Coupled with the rebound of international crude oil, downstream market access improved, manufacturers shipped smoothly, and prices rose slightly. But then crude oil plummeted, and the market was in a bad mood. The downstream markets withdrew. In the middle of the month, crude oil plummeted again, hitting the market obviously, manufacturers kept making profits, and the shipment situation slightly improved. Then, with the retaliatory rebound of crude oil and the growth of market demand, the LPG market ushered in the rising market again. However, the positive results were limited. At the end of the month, with the further exploration of crude oil and the impact of the sharp fall of CP price expectation in April, LPG turned back to decline again. At present, although the terminal demand has improved, it has not fully recovered, and the contradiction between market supply and demand is still in progress.

Industry: according to the price monitoring of SunSirs, in the list of commodity prices rising and falling in March 2020, there was one kind of commodity rising month on month in the energy sector, with LNG (7.42%) rising. There were 15 kinds of commodities falling on a month on month basis, with 13 kinds of commodities falling by more than 5%, accounting for 81.3% of the number of commodities monitored in the sector; the top three products falling were WTI crude oil (-57.34%), Brent crude oil (-48.93%) and LPG (-26.85%). The average rise and fall of this month was -19.01%.

Market Forecast

At present, the market demand has increased but is limited, and the contradiction between supply and demand still exists. After the introduction of CP price in April, propane fell by $200/ ton; butane fell by $240/ ton, although the drop was smaller than expected. At present, LPG has fallen to a relatively low level, and manufacturers have a clear attitude of market protection. The trend in April may be expected to rise.

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