Global commodity price reporting agency Argus is starting publication of the first price index for the Chinese LPG market, which will be an important tool in bringing transparency to domestic and global industries.
China is the world’s largest consumer of LPG – predominantly propane and butane – accounting for almost a fifth of global demand. Its huge domestic market has traditionally been opaque, offering limited information about trading activity and prices.
Residential cooking and heating make up 35pc of Chinese LPG consumption, with petrochemical production and industrial uses accounting for most of the rest. The new Argus price, the Argus Pearl River Delta Index, covers six areas in Guangdong province, in south China. This region consumes a quarter of the country’s LPG, and demand has been growing fast over the past few years.
The Argus Pearl River Delta Index is calculated daily in yuan/t as a volume-weighted average of spot and short-term sales prices at six terminals — Jovo Energy, Dongguan; Chinagas, Nansha; Sinobenny, Dapeng; New Ocean, Gaolan; Siamgas, Gaolan; and CNOOC, Gaolan. It is published in the Argus International LPG daily report.
Argus is the leading provider of LPG pricing information worldwide, and its assessments are widely used as regional benchmarks. Traders are able to buy and sell physical supplies on an Argus-related basis and linked derivatives are available to hedge risk.
“China’s role in global LPG markets is key,” Argus Media chairman and chief executive Adrian Binks said. “We have worked closely with the industry to develop this new index, which means that price trends and trading activity in the domestic market will be much better understood.”
