LST C3 premium to EPC widens

OREANDA-NEWS. July 20, 2015. LST propane at Mont Belvieu, Texas traded at a wider premium to the EPC storage cavern this week as gains at LST outpaced the other location.

Propane prices at the two caverns diverged widely in late May, when a series of heavy rainfalls spurred logistical constraints at both locations due to concerns the diluted brine ponds could cause storage contamination.

Since that time, LST's premium to EPC narrowed to as close as 1.375? by the end of trading 10 July. However, this week steep demand for LST propane pushed the premium back out to 3.375? today.

This week traders eyeing a flattening forward curve for crude opted to sell crude and buy LST propane, which sees a steeper contango going into the fourth and first quarters. At the same time, trading in EPC propane, which connects to the Enterprise export terminal, saw muted interest and less liquidity. Propane exports out of the US Gulf coast are currently limited to mostly contractual volumes due to high VLGC freight rates that make the arbitrage to other regions unworkable for most traders.

Conway, Kansas, propane markets lagged LST's price movements as well, as thin seasonal demand continues to take a toll on liquidity. As LST propane firmed this week, Conway's discount to the Gulf coast hub widened from 7.875?/USG on 14 July to 9.5?/USG on Friday.