- Move Aims to Strengthen Competitiveness in the Asian Market.
- Soft Demand and High Inventories Drive Price Reductions.
- Narrower Price Gap Creates New Arbitrage Opportunities.
Saudi Aramco has cut its LPG contract prices for November 2025, bringing them down to the lowest levels we’ve seen since August 2023. The price for propane has dropped by $20 per tonne to $475, while butane has seen a $15 reduction, now sitting at $460. These consecutive cuts, following similar reductions in October, are aimed at boosting Aramco’s competitiveness against US suppliers and others in Asia, reports Drewry.
Soft Demand and High Inventories Drive the Move
The global demand for LPG has softened, with only a 2% year-on-year growth expected in 2025. Meanwhile, inventories in Asia are still high after significant restocking in the third quarter. Factors like weak demand from Chinese PDH, lower crude prices, and predictions of a mild winter have all contributed to a dip in buying interest.
Impact on Arbitrage and Shipping Patterns
Even with the price cuts, Mt. Belvieu prices remain elevated due to strong demand from Europe. The reduced price difference between Middle Eastern and US cargoes makes Middle Eastern LPG more appealing in Asia, creating some short-term arbitrage opportunities. However, an increase in flows from the Middle East to Asia could lower tonne-mile demand, which might put pressure on LPG shipping rates over time.
Strategic Timing and Market Effects
Aramco’s timing is strategic, coinciding with the contract renewal period for 2026, which encourages Asian buyers to lock in favourable terms. This move not only benefits importers with lower landed costs but also boosts short-haul shipments to Asia. Additionally, China’s ongoing trade tensions with the US have made it more inclined to favour Middle Eastern cargoes.
US Retains Competitive Edge Despite Cuts
Despite these cuts, the US is expected to maintain its market share, bolstered by increased production, expanding export capacity, and long-term trade commitments. Its propane-rich supply continues to draw interest from Asia’s PDH sector, although the narrowing arbitrage could lead to occasional cargo cancellations.
Middle East–Europe Trade Unlikely to Revive
While cheaper Middle Eastern LPG could interest European buyers, ongoing Suez Canal security concerns, competitive US pricing, and existing supply chains make a major shift unlikely. However, Aramco’s cuts could pressure Algerian and Mt. Belvieu benchmarks to adjust downward in the coming months.
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Source: Drewry
