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Market Chatter: US LPG Buyers Cancel Cargoes as Shipping Rates Surge

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A war-driven surge in freight rates prompted some buyers of US liquefied petroleum gas, typically bound for Asia, to cancel their shipments, Bloomberg reported Thursday, citing people familiar with the matter.

Sources told the news agency that at least two cargoes scheduled to load in June from US Gulf Coast export terminals were canceled, with some buyers considering terminating more shipments.

Shipping disruptions in the Strait of Hormuz have cut supplies of Middle Eastern LPG, prompting Asian buyers to seek alternative cargoes, mainly from the US.

However, geopolitical tensions have also resulted in higher freight rates, eroding the economics for exporting US gas to East Asia, according to data compiled by Bloomberg.

In India, inflated shipping rates have reportedly weighed on margins of state refiners, as they turned to the US to partially replace Middle Eastern LPG. The country relies on the Middle East for around 90% of its LPG imports, to primarily meet domestic demand for cooking.

has reached out to India's Ministry of Petroleum and Natural Gas to seek feedback on the reported margin trend and LPG cargo cancellation.

For other Asian buyers of US LPG, freight surge is also a main concern as tankers have to queue and take longer routes through the Panama Canal and Cape of Good Hope.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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