Nov. 28 (Bloomberg) -- Saudi Arabia’s price for butane in December rose to a record amid increased buying in the Asian spot market and supply cuts by Middle Eastern producers.
The December-loading butane contract price set by Saudi Arabian Oil Co., the world’s largest liquefied petroleum gas producer, increased $310 from the previous month to $1,225 a metric ton, the highest since the exporter started posting the price in 1994, said a company official. Propane rose $225 to $1,100 a ton, the most since March 2012, said the official, who asked not to be identified due to internal policy.
The price rise reflected buying by traders in the Asian spot market and demand from Thailand and Indonesia, as well as export reductions by the U.S., U.A.E., Saudi Arabia and Kuwait, said a senior general manager for the LPG trading division at Eneos Globe Corp., the venture owned by JX Nippon Oil & Energy Corp., Mitsui & Co. and Marubeni Corp.
“These mixed set-ups created the sudden rise in prices and widened the spread between butane and propane to the unprecedented level of $125,” Takanobu Sugai, the Tokyo-based manager at Japan’s largest LPG supplier, said by phone. Traders are “buying up pretty aggressively in the spot market. We are not sure about their intentions. Another factor is that December-arrival cargoes from the U.S. were less than everyone expected.”
The price gap between propane and butane was $40 a ton in November.
U.A.E. has been cutting about 10 percent of its exports due to lower production, while Kuwait, the world’s largest LPG exporter, has been delaying loadings of the fuel, Sugai said. Saudi Arabia is also reducing spot exports, he said.
To contact the reporter on this story: Yuji Okada in Tokyo at email@example.com
To contact the editor responsible for this story: Pratish Narayanan at firstname.lastname@example.org