LPG price likely to drop by Rs10,000 per ton

Market takes cue from Saudi Aramco contract price.

ISLAMABAD:

Prices of liquefied petroleum gas (LPG) are expected to fall by Rs10,000 per ton from Monday following a sharp decline in Saudi Aramco contract price to which the domestic market is linked.

The Saudi contract price for April is $993 per ton, which is significantly lower than the record high of $1,200 per ton reached in March. Local LPG producers, however, had fixed prices equivalent to $1,088 per ton for March.

“Impact on the domestic market will be $95 per ton and not $207 since the producers had partially absorbed last month’s price rise. The new producer price including taxes will be Rs104,920 per ton,” said Belal Jabbar, spokesman for the LPG Association of Pakistan.

Retail prices are expected to drop to Rs128 per kg in Punjab and northern areas and to Rs123 per kg in Karachi. Prices of domestic (11.8 kg) and commercial cylinders (45.4 kg) will be Rs1,510 and Rs5,811 respectively.

LPG sales have remained sluggish since the start of the year due to high prices and increase in production from Sindh fields. Moreover, cheaper LPG imports from Iran, which cost substantially less than the Saudi contract price, have increased markedly.

The demand remains weak despite shutdown of Pak-Arab Refinery Company, which contributes 25% to the country’s LPG production.

“The link between domestic and Saudi prices needs to be revisited in the light of increase in domestic production and cheaper imports from Iran. Import terminals in Karachi, including one acquired recently by Sui Southern Gas Company (SSGC), have been sitting idle since January,” said Belal.

Published in The Express Tribune, April 1^st, 2012.