LPG bounces back as market digests new US-China trade terms

Commentary summary:

• Prompt propane FEI rose following the new tariffs announcement, getting closer to below pre-tariff levels.

• Physical premiums in the Mediterranean are expected to drop after Iberian disruptions end.

• East-bound arbitrage is fully closed, with deeply negative margins even for LR2s.

• For the first time in months, signs are pointing to bearish momentum in the global naphtha market.

Two major factors are strongly impacting the light ends market this week. First, Monday’s announcement of new tariff levels between the US and China is expected to significantly affect LPG and naphtha demand and trade flows in the coming months.

Jorge Molinero is a Commodity Owner at Sparta. Starting his career as a financial analyst with BBVA, Jorge quickly transitioned to market intelligence within the energy sector, spending 4 years as a naphtha analyst with Repsol before joining Sparta in early 2023.

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