International gas price fell in April, Platts data shows

The international price for liquid petroleum gas (LPG) fell in April while Maltese consumers had to bear the brunt of a price hike on gas cylinders, according to Platts prices provided to this newspaper.

While importers Liquigas cited the increasing international price of butane as the driver behind the increase in the price of gas at the start of April, prices quoted in Platts LPGaswire indicate that the price of their LPG mix actually decreased by 2.2%.

The Platts figures seen by this newspaper show that the price of a ton of LPG - which comes as a mix of 70% butane and 30% propane - fell from €1,018 to €995.

The same data shows that propane fell from $1,070 per metric ton to $935 between March and April, quoting the seagoing free-on-board price, while butane increased from $990 to $1,020.

Industry sources belie the rising price in butane as the main driver behind Liquigas's price hike. "Liquigas's bulk-buying means that once a consignment of LPG is purchased, their domestic prices cannot be changed when the international price falls," a reliable industry source, who insisted on anonymity, told MaltaToday.

Price increases for gas cylinders have to be approved by the Malta Resources Authority.

In the last price hike, the greatest portion of the increase was borne by domestic consumers. A MaltaToday review of the prices for the last 18 months found consumers who purchase the 10kg and 12kg cylinders have taken on an increase of 8.5% and 9.4% respectively compared to February 2012.

The slightly larger 15kg cylinder increased even more by 11.8%, but the price of an industrial-sized 25kg cylinder increased by just €2.50 or 6.55% from February.

Liquigas Malta has also insisted that the price increase was down to the euro's weakness against the dollar, and ongoing speculation on the international market, saying the price never went below the $800-per-tonne mark since October 2010, instead hovering around the average $950-per-tonne.

"At times, the international price increases were so high that Liquigas Malta was faced with the most difficult challenge of having no other option but to ask for a price increase after submitting the commercial workings to the Malta Resources Authority (MRA) in order to prove that such increases were justified. Each time, Liquigas proposes a new pricing structure, this has to be set according to an MRA's price mechanism formula and the authorities verify any increases," the company said in its statement.

The most recent prices from Platts LPG mix prices saw the international price of LPG breach the $1,000-per-tonne mark in January 2012.

"There were other instances during the last 12 months when Liquigas Malta absorbed the increased international costs itself.

This happened on a number of occasions when no price increases were announced at the beginning of a month," Liquigas said.

Liquigas says it is identifying alternative sources of supply outside Europe to mitigate the impact on domestic LPG pricing, while keeping a contingency plan in place to acquire LPG from Italy or France to guarantee continuity of LPG supply in Malta. Doubling its storage capacity at the Benghisa plant will also reduce vulnerability to external pressures and guarantee adequate supplies, even in difficult wintry conditions.