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WEEKLY LPG INSIDER REPORT

In the preceding week, LPG prices slightly increased in the international and domestic markets

 

  • International (Mont Belvieu) prices of LPG started rising and reached a peak in the middle of the week but ended with a slight fall compared to the to price at the beginning of the 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 has 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 continues to fall as a result of low capital inflow due to Covid-19 effect and unstable nature of oil price in the international market

    • For the gas market, the Purchasing Managers Index (PMI) of the CBN reports a decline in November for new orders in the Electricity, gas, steam & air conditioning supply category while Business Activities and employment & inventory contracted in the same month. The declining trend in Business Activities and employment & inventory signal contraction in demand in the respective value chains.

    • Inflation remains high. The persistent rise in inflation in the past more than 11 months (in October 14.23, September 13.7%, August 13.2%, July 12.8%, June at 12.6% from the 12.4% recorded in May 2020) is increasingly being reflected in a higher price of LPG across the country. More importantly, the composite food index rose to 17.38 in October from 16.16% in September and 16.0% in August, 15.48% in July 2020 compared to 15.18% in June 2020.

    • Prices of crude oil in the international market rose throughout the week. (Figure E).

       

       

      • We expect LPG prices to continue to rise in the coming days due to the increased rate of inflation

      • It is anticipated that the high transportation cost will result in high LPG price in the coming weeks for the end-user

 

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