WEEK 95: LPG Insider Report

Prices on domestic markets for LPG continue to rise while in the international markets for LPG were observed sloping downward in the same week.  

By Teslim Waheed

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WEEK 95: LPG Insider Report


Prices on domestic markets for LPG continue to rise while in the international markets for LPG were observed sloping downward in the same week.

  • The international prices of LPG were on a fallen note in the previous week. It started with a high price but ended with a sharp decrease.

  • Depot prices continued to increase throughout the week compared to the previous week.

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

  • 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 a 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: Inflation has consistently risen Over the last five months there has been a slight decrease month in month inflation rate.. It fell from 17.01% in August to 16.63% in September 2021, (See Illustration D). In November 2020, it rose to 14.89%. The composite food index reduced to 19.57% in September 2021 from 21.30% in August, 20.57 per cent in January 2021, 19.56 per cent in December 2020, and 15.48 per cent in July 2020, compared to 15.18 per cent in June 2020. For the month of May, a 15.4 per cent inflation rate is expected. The relaxation of the Covid-19 rule may have influenced the inflation rate trend..

     

    • Exchange Rate and the LPG: Exchange rate value from the CBN official site ranged from N410.81/$1 rate to 410.96/$1 in the previous week. (Figure E). This followed the CBN action on blocking the sales of Dollar in the Bureau de Change and gave the responsibility to the commercial banks. 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 fluctuated throughout the week but ended on a risen note (Figure F). This indicates that a rising price of crude oil in the international market results in an increase in the cost of LPG. This signal a rise in the price of the LPG market.

     

    • Foreign Reserves: As in the previous week, the Nigerian Gross Foreign Reserve increased from $39.82 billion to $41.12 billion amid the devaluation and rising rate of the Naira at N410.89 to 410.96/US$1. This will signal to the investors and the country's creditors the strength of naira and the 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 per cent in the same month.

       

       

       

       

       

       

       

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      • Covid-19: 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

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      • 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 the pressure of LPG export on the US

       

       

       

      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 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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