Singapore. Tankers carrying liquefied petroleum gas (LPG) are floating off Singapore for the first time this year as traders wait for opportunities to offload the fuel at more lucrative prices, three industry sources said.
At least one Very Large Gas Carrier (VLGC), the Pacific Binzhou, is anchored in Singapore carrying LPG, shipping data on Thomson Reuters Eikon showed. The ship docked more than five days ago.
One other VLGC had recently left for China after anchoring off Singapore for some time, sources said, but this could not be independently verified.
"The situation is not as severe as last year. Traders are likely aiming to get better prices by floating for a short period of time," one of the sources familiar with the matter said.
LPG supply is not as excessive as last year, trade sources said, due to demand from India and China this year.
In August last year, more than 10 ships were holding LPG - whose uses include heating, cooking and petrochemicals production - off Singapore for months before they could find buyers in winter.
There is less incentives to store LPG this year as the contango is not more than $2 versus last year when it was more than $15, another trade source said.
Contango occurs when front-month prices are lower than those in the following months due to weak market fundamentals including oversupply.
"Natural gas production is in max mode now because of demand for power to power things such as air conditioning during summer," a third source said.
"More natural gas means more LPG in June to August," the same source said, adding that any floating of excess LPG supply would be short term.