Prices have shown a slight rise in the international and domestic markets for LPG in the immediately preceding week
International(Mont Belvieu) prices of LPG started on a rising note and ended on a slightly lower note compared to the same day in the previous week.
Prices of LPG at the depot level showed a slightly different trend compared to the previous week: the price difference between the Mont Belvieu and depot prices are slightly narrower compared to the previous week under review through the week under review.
The difference between prices per kg of LPG at the depots and retail prices in Nigeria have not changed much compared to the previous week. Like the depot prices, retail prices fell through the week.
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. Though the South-south geopolitical zone hosts the great majority of depots in the country due to its proximity to the ocean, prices have been highest in the region.
The exchange value of the naira to the US. $ has remained at the pegged price of N380 to US.$1 throughout the week (Figure D).
Nigeria's foreign reserve is continuing to experience a rise as in the previous week. The continuous rise has been the trend since the devaluation and pegging of the naira at N380 to US$1.
For the gas market, the Purchasing Managers Index(PMI) of the CBN report declining Business Activities, and New Orders, and employment & inventory for the month of August 2020 compared to July. The declining trend across all measures of industry performance are at variance with the outcomes for July which seemed to suggest some sign of recovery from the COVID-19 induced lock-down.
Inflation remains high. The persistent rise in inflation in the past more than 11 months (in July 12.82 June at 12.6% from the 12.4% recorded in May 2020) has implications for the price of LPG across the country. More importantly, the composite food index rose by 15.48% in July 2020 compared to 15.18% in June 2020.
Prices of crude oil in the international market in the week under review showed a rising trend, nearly throughout the week (Figure E).
We expect LPG prices to continue to rise in the coming days as inflation continues to rise.
We also expect a more than proportionate rise in LPG prices at the retail level (as the cost of transportation rises) compared to the depot/international prices in the coming weeks.
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