LPG Contract Price (CP)

LPG Contract Price (CP), commonly called the “Saudi CP” is the primary driver of LPG pricing in the Far East including the Philippines. It is the international price benchmark set at the beginning of each month by Saudi Arabia’s state - owned oil company Saudi Aramco.

Aramco's CPs, which set the price of LPG lifted from the Saudi ports Yanbu, Ras Tanura and Ju'aymah under term supply contracts, are closely watched by the market as they tend to set a base level for LPG pricing for most markets East of Suez.

The DOE refer to the LPG/Saudi CP and forex monthly average changes in determining/monitoring the price adjustments of LPG in the domestic market. Following the timing of the monthly changes in CP, domestic price of LPG also varies every first day of the month and remain constant throughout the whole month.

Like all other petroleum products, the Philippines has no influence over the LPG CP as the country’s domestic requirement is small versus the world demand.

For the month of December 2020, LPG Contract Price has increased by US$20.00/MT to US$ 457.00/MT, from US$ 437.00/MT last month.

International LPG Market Development

• The CPs have risen on the back of firmer crude benchmarks, and as North Asian demand was supported by forecasts of a severe winter.
• Aside from Middle East, US remain as major LPG supplier to Asia. US LPG cargoes due to arrive in Asia in December are estimated at around 2.17 million metric tons, slightly lower than November arrivals of around 3 million metric tons. 
  • Majority of the US cargoes are propane-heavy, with butane normally making up 20% of the volume. US shipments though can also comprise evenly-split cargoes of propane and butane.
  • Platts report however noted that Asian importers have not received a lot of butane from the US as they need to do more checks on specifications for volatility. The market also needs two to three years to gather more evidence on the stability and quality of the product for use in the petrochemical, commercial and household sectors in Asia before US full butane could be accepted.
• Major Asian buyers such as India and Indonesia are key consumers of butane used as cooking fuel, though they normally buy mixed propane/butane cargoes in the ratio of 50:50, 70:30 or 30:70.
  • Prices of butane in Asia have been above propane since turning to a premium early September, while prior to that butane had been at a discount to propane for some four months, S&P Global Platts data showed.
  • India has not sought spot cargoes for end-year delivery, an indicator which traders suspected that state run buyers sought earlier loading dates for term butane and mixed cargoes from Middle East suppliers, which could have tighten butane availability and keeping butane at a premium to propane.
• Japan and South Korea buy propane-heavy cargoes used for heating and occasionally as petrochemical feedstock, while China buys propane -heavy cargoes as feedstock in propane dehydrogenation plants and for residential use.
  • Ample US propane supply has been meeting healthy demand from Chinese petrochemical plants and winter demand in North Asia. Oriental Energy had sold spot propane in Asia physical market along with South Korean trader E1 Corp.

Domestic Prices      

Oil companies have to increase the price of LPG for December 2020 by P0.95-P0.96/kg or about P10.45- P10.56 per 11-kg cylinder. Auto LPG likewise increased by P0.54/liter.

However, LPG prices are frozen from November 18 to December 3, 2010 following the Proclamation No. 1021 s. 2020 that declared Luzon under calamity.

Upon effectivity of the adjustments, household LPG in Metro Manila are estimated to range from P550.00-861.00 per 11- kilogram cylinder.

For more information, call the Department of Energy:
Pricing: 840-2187
LPG: 840-2130
Fuels: 840-5669
SMS: (0915) 4469421
Email: oilmonitor@doe.gov.ph
Website: www.doe.gov.ph