WEEK 75: LPG Insider Report

In the immediately preceding week, prices in the foreign market were on a risen note while domestic prices for LPG were relatively stable during the week  

By Teslim Waheed

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WEEK 75: LPG Insider Report


In the immediately preceding week, prices in the foreign market were on a risen note while domestic prices for LPG were relatively stable during the week
 

  • The international prices of LPG rose throughout the week. This indicates some appreciation levels in the global crude oil price.

  • Depot prices was relatively stable compared to the previous week.

  • Despite a somewhat higher price in foreign markets, the shrinking of price gaps between prices at the depot level and those at the international level has remained consistent.

  • In the week under review, the price increased per kg of LPG and has been within the stable ranges with in the last few weeks.

  • Due to transportation costs and proximity to the coast, disparities in LPG retail pricing still exist across the country.

     

     

     

     

     

     

     

     

     

    A daily feature of the Nigerian LPG market was regional variance in LPG prices across the country. Because of the distance from coastal areas the South-East region has the highest price.

     

     

     

    • 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.

     

    • 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.

           

       

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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