WEEK 74: LPG Insider Report

Prices on domestic markets for LPG relatively stable while the international markets for LPG fluctuated in the same week      

By Teslim Waheed

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WEEK 74: LPG Insider Report


Prices on domestic markets for LPG relatively stable while the international markets for LPG fluctuated in the same week
 

  • The international prices of LPG reached its peak at the initial period of the week while fluctuating but ended on a risen note.

  • Depot prices were relatively stable till the end of the week compared to the previous week.

  • The narrowing disparities between prices at the depot level and those at the international level still persists.

  • Price changes per kg of LPG in the week under review and in the past few weeks have remained within the limited range.

  • Regional disparities in the retail prices of LPG within the country continue to persist.

     

     

     

     

    Regional disparity in the prices of LPG across the country has been a regular feature of the Nigerian LPG market. There is wide gap between the South East and South-west prices, this is due to its distance from the coastal region, has the highest prices due to distance from the coastal regions.

     

     

     

     

    Inflation Rate and the LPG: Over the last 13 months, the rate of inflation has been steadily increasing. In March 2021, however, the rate of inflation fell from 18.17 to 18.12 in April 2021. (Fig D). From 12.8 in July 2020, to 13.2 in August 2020. The composite food index reduced from 22.95 in March 2021 to 22.72 in April 2021, 20.57 in January 2021, 19.56 in December 2020, 15.48 percent in July 2020 compared to 15.18 percent in June 2020. The anticipated inflation rate for the month of May is 15.4%. The relax of Covid-19 rule might contribute to the change in the rate of inflation trend.

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    • Exchange Rate and the LPG: The exchange rate experienced some increases at N410.22 to $1 at the end of the week while the initial rate stood at 410 to $1 in the beginning of the week due to the continued growth of inequalities in the parallel market. The exchange rate is one of the factors that influences LPG prices on the international market. A higher exchange rate would boost the price of LPG on the local market by a considerable amount. This means that the LPG market is in a state of flux, Figure E.

     

    • Crude oil Price and the LPG: The relationship between LPG price and crude oil price remains positive, as a by-product of crude oil. Crude oil prices reached its highest point at the end of the week despite increases at the initial point from the beginning of the week. (Figure F). This shows that the price of crude oil has not been stable in the international market. This reflects variability in the market price for LPG.

     

    • Foreign Reserves: As in the previous week, the Nigerian Gross Foreign Reserve showed some level of appreciation from $34.20 billion to $34.22 billion amid the fluctuation in the price of oil and pegging of the Naira at N380 to US$1. This will signal to the investors and country's creditors the strength of naira and ability to repay debt.

     

    • 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: Covid-19 causes demand for goods and services to fall due to the full or partial lock-down effect. The implication of the Covid-19 contracts to the LPG market

Southeast Stay-at-home: The activities of unknown gunmen in the southeast has caused the people of the area to stay indoors for in the week under review. This has caused a decreased in the quantity of LPG demanded throughout the week

 

    • 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.

    • Federal government is implored to intervene in the mayhem in the southeast region in order to restore peace and order so that economic activities will be flowing

       

      The prices in the weeks to come may rise due to the effect of increase in the rate of inflation.

       

       

 

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