WEEK 80: Weekly LPG Insider Report

Prices on domestic markets for LPG fluctuated slightly while the international markets for LPG fluctuated at an increasing rate in the same week  

By Teslim Waheed

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WEEK 80: Weekly LPG Insider Report


Prices on domestic markets for LPG fluctuated slightly while the international markets for LPG fluctuated at an increasing rate in the same week

  • The international prices of LPG reached its peak at the end of the week despite fluctuating at an increasing rate.

  • There was initial increases in Depot prices while diminish set in at the middle 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 increased in the week under review.

  • 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: There has been a continuous rise in the rate of inflation in the past 13 months. The rate of inflation in March 2021 reduced 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: Exchange rate value from the CBN official site moved fluctuated at a decreasing rate from N410.13 to 410.11/US.$1 in the previous week (Figure E). This followed the CBN action on naira Devaluation. The exchange rate is one of the variables that determine the price of LPG in the international market. A higher exchange rate will add to the cost price of the LPG. This reduces LPG in the market.

     

    • Crude oil Price and the LPG: As a by-product of crude oil, the relationship between the LPG price and crude oil price is positive. The Prices of crude oil in the international market sloped downward from the beginning of the week till the middle of the week while appreciation set in from the same middle of the week till the end of the week (Figure F). This indicates that a risen price of crude oil in the international market results in increase in the cost of LPG. This signal a rise in price of the LPG market.

     

    • Foreign Reserves: As in the previous week, the Nigerian Gross Foreign Reserve decreased from $33.23 billion to $33.09 billion amid the devaluation and rising rate of the Naira at N410.12 to 410.20/US$1. This will signal to the investors and country's creditors the strength of naira and ability to repay debt.

     

    • PMI: The Purchasing Managers Index (PMI) of the CBN recorded overall growth in jobs, business activities, and inventory in the gas sector in December, while orders remained stagnant in the Electricity, gas, steam & air conditioning supply segment, while Business Activities and employment & inventory remained 45.7 percent in the same month.

       

       

      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

       

      • To reduce the effect of the Covid-19 on the economy, there should be a constant awareness programme through the media and places of worship; and also vaccine for Covid-19 should be made available for everybody

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      The prices in the weeks to come may rise due to the increase in the prices of goods and services

       

       

       

      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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