"Prices remained fairly stable in the domestics market and only slightly less stable in the international market for LPG in the immediately preceding week"

• • International prices of LPG initially plummeted to close to 0.195 $ per Kg and then started to rise towards the end of the week under review. That notwithstanding, prices remained largely stable.
• • We find only a slight rise in depot price in response to the rise in prices internationally which only began to be evident towards the end of the week.
• • Prices per kg of LPG at the depots in Nigeria still remain well over double the prices at the international market.
• • Prices continue to differ acrosscities and regions of the country. However, price levels remain stable across the cities in the week under review.

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 stability in the exchange value of the naira to the US. $ was reflected in the stability of LPG prices domestically throughout the week (Figure D).
• • The gross foreign reserves of Nigeria is continuing a downward trend in nearly the same fashion as we find in the previous week.
• • As noted last week, the composite Purchasing Managers’ Index (PMI) for the month March 2020 stood at 49.2 points, indicating contraction in Non-manufacturing PMI for the first time after thirty-four consecutive months of expansion.
• • For the gas market, managers report declining inventory, new orders and employment.
• • New data on the inflation level for March 2020 is shoing a 23 months high in Month-on-Month inflation level.
• • The price Of oil in the international market witnessed a significant drop in the middle of the week followed by an immediate recovery (Figure E)

 

• Price of LPG in the domestic market may rise in response to recent drop in international prices.
• We expect a continuous stabilization of the exchange value of the naira as market players adjuster to the new rates.
• We do not expect any significant impact on domestic consumption of the increase in month-on-month inflation level.

 

 

 

 

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.

Prices remained largely stable in the domestics and  dropped in the international market for LPG in the immediately preceding week.

 

The fall in LPG prices at the international market continued through this week.

The drop in prices at the international market was greater than what was experienced last week. However, prices at the depots have, once again, remained generally stable, as with the previous week,  suggesting fairly managed inventory risks.

 Again, stability in the 'official'  value of the naira is also contributing to the stability in the domestic price of LPG for the most part of the week under review until Friday when an official devaluation was announced. 

Price disparity for 1 kg of LPG between what obtains at the international market level and the depots in Nigeria widens.

Regional disparities within the country has continued widening.

 

Regional disparity in the prices of LPG across the country has been a regular feature of the Nigerian LPG market.  This gap has widened this week. Though the South-south geopolitical zone hosts the majority of depots in the country due to its proximity to the ocean, prices have been highest in the region.

 

• While we noted last week the increase in activities that the composite Purchasing Managers’ Index (PMI) for the non-manufacturing signals, we note that the report on slowing inventory and new orders in the LPG  market (within the Electricity, gas, steam & air conditioning supply sub-sector) might have been accelerated in the face of global fall in economic activities and the rise in inflation in Nigeria. 
• The foreign reserves of Nigeria continue to decline.  From US.$36,050,032,069 at the start of the week to US. $35,892,334,652 at the close of the week.  The drop is 0.44% from the 0.17% drop recorded last week.
• The drop in the reserve is growing at a higher rate with greater implications for the value of the naira in the days and weeks to come and in turn the landing cost of  LPG to Nigeria. We posit a potential devaluing of the Naira in the coming week.

 

We affirm much of the predictions of the previous week. Price stability will be slightly upset as the gains from the slight drop in LPG prices internationally might be significantly offset by the rising inflation levels and a continuous devaluation of the naira in the coming weeks.

A potential continuous drop in the value of the naira might signal increases in domestic LPG prices particular if such devaluation are followed by inflation. We expect a lag in the before this effect fully kicks in.