WEEK 67: Weekly LPG Insider Report

Prices on domestic markets and international market for LPG were relatively reduced in the immediately preceding week

By Teslim Waheed

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WEEK 67: Weekly LPG Insider Report


Prices on domestic markets and international market for LPG were relatively reduced in the immediately preceding week

  • The international prices of LPG sloped downward throughout the week.

  • Depot prices have shown some depreciation compared to the previous week.

  • The narrowing of the price disparities between prices at the level of the depot and those at the international level is consistent.

  • In the week under review and the previous two weeks, price variations in LPG per kg remained within a narrow range.

  • Within the region, regional variations in LPG retail prices continue to exist.

     

     

    A frequent feature of the Nigerian LPG market has been the regional variance in the price of LPG across the country. Due to its close proximity to the coastal region, the South West region has the lowest rates.

     

     

     

     

    • Inflation Rate and the LPG: Over the last 10 months, the rate of inflation has been steadily increasing. In January 2021, it increased from 16.47 to 17.33 in February 2021 (Fig D). From 14.89 in November to 15.75 in December 2020. The composite food index rose to 21.79 in February 2021, 20.57 in January 2021, 19.56 in December 2020, 15.48 per cent in July 2020 compared to 15.18 per cent in June 2020. The anticipated inflation rate for the month of March is 14.37%. The post effect of Covid-19 and border policies against essential goods are contributing to the growing trend.

     

    • Exchange Rate and the LPG: The Central Bank of Nigeria's (CBN) pegged exchange rate (Figure E) has remained stable at N380 to US$1 throughout the week, despite widening disparities in the parallel market. The exchange rate is one of the factors that determine the price of LPG in the international market. A lower exchange rate does not lift the selling price of LPG on the local market since more LPG is imported.

     

    • Crude oil Price and the LPG: The price of LPG is positively related to the price of crude oil since it is a by-product of crude oil. The Prices of crude oil in the international market were on appreciated value in the preceding week but ended up falling in the week (Figure F). The cost of LPG increases as the price of crude oil rises on the international market. This suggests a strong LPG market price.

     

    • Foreign Reserves: As in the previous week, despite the devaluation and pegging of the Naira at N380 to US$1, the Nigerian gross Foreign Reserve continues to show some appreciation from $34.84 billion to $34.97 billion. This signals to the forex market that Naira is gaining some strength against the dollar

     

    • PMI: The CBN Purchasing Managers Index (PMI) recorded overall growth in employment, business and inventory in the month of December while ordering in the category of supply for power, gas, steam and air conditioning remained stagnant while business operation & inventory were static in the same month at 45.7 per cent.

       

       

       

       

       

      • Covid-19: Nigeria is presently experiencing a second wave of the Covid-19 pandemic. This has made some state government in to ban a gathering of people that is more than 20. Covid-19 causes demand of goods and services to fall due to the full or partial lock-down effect. The implication of the Covid-19 contracts the LPG market

         

        • Reducing the effect of the Covid-19, entails more campaign and public awareness of the virus as people are easily carried away and relaxing. Vaccines for Covid-19 should be distributed without much delay if available.

        • Nigerians are advised to take the AstraZeneca COVID-19 vaccine, manufactured by the Serum Institute of India to be immune against the virus.

       

       

       

      The Nigerian LPG Market is the next success story of the Global LPG industry, if you need a partner with a global perspective and local expertise in the Nigerian and African space, kindly book for a free session with our team of experts to help you http://www.kiakiagas.com/book-session or write us an email at advisory@kiakiagas.com or Whatsapp: +2348085269328

     

 

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