TRADERS of liquefied petroleum gas (LPG) face a supply glut that has sent prices tumbling. Estimates are that 36-million additional tonnes of liquefied natural gas (LNG), a major source of butane and propane, the components of LPG, have come on to the market in the past year.The cause of the glut is a higher crude oil price that has put many US shale gas producers back in business, to the extent that US gas production again rivals Saudi Arabian levels.Hopes that China would take up the slack have not materialised. Instead, Chinese buyers, who are tough bargainers, are forcing prices down to 60% of what they were. Gas traders’ stocks bought at high prices face huge losses, and oil firms are rushing to cancel supply contracts.Traders like Vitol, Gunvor, Shell, BP and EDF are said to be paying millions in penalties rather than unload gas cargoes in Texas ports.Mining and trading giant Glencore has seized the moment to challenge Trafigura and Vitol’s market position in an attempt to bec...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.