Algerian state-owned Sonatrach has set its August LPG contract prices at $540/t for propane and $570/t for butane, marking increases of $100/t and $90/t respectively. The gains are attributed to rising crude benchmarks, despite weakness in regional LPG markets.
The pricing of Sonatrach's LPG contracts directly impacts regional energy costs and influences the broader LPG market dynamics, reflecting the interplay between crude oil benchmarks, geopolitical events, and localized supply-demand conditions.
Algerian state-owned Sonatrach has set its August contract prices for Liquefied Petroleum Gas (LPG) at $540 per metric ton for propane and $570 per metric ton for butane. These prices represent significant increases of $100/t for propane and $90/t for butane compared to the previous posting, rebounding sharply from July's losses.
The substantial gains in outright prices are not reflective of the local LPG market's weakness but are instead driven by the rise in the underlying Atlantic basin crude benchmark, North Sea Dated, which increased by approximately $159/t since Sonatrach's last price announcement. Crude prices and broader energy sector values surged this month as optimism waned regarding a resolution to the US-Iran conflict, following US President Donald Trump's declaration on July 8 that the US-Iran ceasefire was "over."
Despite the support lent to LPG postings by flat-price crude, eastern Atlantic basin markets for both propane and butane are experiencing significant weakness. Benchmark cif Amsterdam-Rotterdam-Antwerp (ARA) assessments and smaller Mediterranean coaster cargo assessments have lost ground against crude due to slack demand meeting abundant supply. Demand is seasonally low, with residential heating requirements absent for propane in Europe and butane in North Africa. On the supply side, refineries are operating at high rates, North Sea supply has recovered, and transatlantic imports remain robust. Logistical challenges, such as Panama Canal transit costs or the expense of routing via the Cape of Good Hope, have deterred some product from reaching markets east of Suez.