India's LPG imports from U.S. set to exceed 1 MMt in June
- India imported 648,300 tons of LPG from the U.S. in May
- LPG is widely used as cooking fuel in Indian households
India's imports of liquefied petroleum gas (LPG) from the U.S. are set to top 1 MM metric tons (t) in June, a record high, industry sources said, as New Delhi turned to costlier suppliers to offset disruption from the Middle East.
Before the U.S.-Israeli war on Iran and the closure of the Strait of Hormuz, India depended on Middle Eastern producers for 90% of its LPG imports, which totaled about 2 MMt per month.
Imports of LPG, widely used as cooking fuel in Indian households, declined to as low as 696,000 t in April because of the strait blockade, government data showed. The imports, however, recovered to 1.15 MMt in May, the data showed.
Before the disruption, New Delhi had planned to raise U.S.LPG purchases to about 10% of total imports as part of its effort to rebalance trade with Washington.
The closure of the waterway accelerated spot buying from the U.S., with Indian refiners purchasing unprecedented volumes at hefty spot market premiums as the government's priority was to maintain uninterrupted cooking gas supplies, said a trade source who is aware of the purchases.
The sources declined to be named publicly as they are not authorized to speak to the media.
India also asked refiners to maximize LPG output, prioritized LPG sales to households and accelerated the rollout of piped gas connections. The efforts have already started to reduce India's LPG consumption by 15% to 20%, one of the sources said.
India is on track to receive about 1.1 MMt–1.2 MMt of U.S. LPG in June, while supplies from the United Arab Emirates have started to recover to around 300,000 t–400,000 t this month, two sources at Indian refiners said.
The UAE offered LPG cargoes loaded from Oman's Sohar port on a free-on-board basis at a premium of about $100/t to Saudi CP prices, the sources said, adding that Abu Dhabi National Oil Co deployed four to five vessels that get LPG up to Sohar port.
Indian refiners will also be getting about 45,000 tof LPG from Kuwait in June, the sources said.
The partial opening of the strait will improve LPG supplies from the Middle East in the coming months, which will help to reduce prices, the sources added.
India imported 648,300 t of LPG from the U.S. and 134,700 t from the UAE in May, according to Kpler data.
Imports from Iran, mainly by small players with negligible links to the U.S., stood at 145,000 t, while shipments from other traditional suppliers, including Saudi Arabia, Oman and Qatar, remained limited, Kpler's data show.
Kpler's preliminary June data indicate India is scheduled to import about 1.07 MMt of LPG from the U.S., around 223,800 t from the UAE, 116,200 t from Iran and 108,600 t from Kuwait, with some volumes expected from Oman, Saudi Arabia, Algeria, Qatar and Nigeria.
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