LPG Price Analysis Based on Aramco CP Announcement – May 2025

Saudi Aramco, as one of the world’s largest producers and exporters of LPG, has officially announced its Contract Prices (CP) for May 2025. The updated prices are as follows:

Propane (C3): $610 per metric ton — a decrease of $5 compared to April 2025.

Butane (C4): $590 per metric ton — a decrease of $15 from the previous month.

LPG Mixture (C3 35% : C4 65%): $597 per metric ton — a decline of $11.50 month-over-month.

Technical Analysis and Key Drivers:
Global Crude Oil Price Decline
The drop in global crude oil prices, particularly Brent, during April due to concerns over reduced Chinese demand and increased U.S. commercial inventories, has exerted downward pressure on LPG benchmarks, directly influencing the CP values.

Increased LPG Supply in Asia and the Middle East
Growing exports from major producers like the U.S. and Qatar have led to intensified competition in key markets, putting further pressure on Saudi Aramco to adjust its CP to remain competitive.

Seasonal Demand Weakness
Entering the warmer months typically results in lower household and industrial demand for LPG. This seasonal factor plays a significant role in softening demand, particularly in major importing regions like Asia and Africa.

Aramco’s Pricing Strategy
Aramco appears to be adopting a strategic pricing approach aimed at maintaining its market share amidst increasing competition. The moderate drop in propane prices versus the sharper cut in butane suggests a tactical balance between profitability and competitiveness.

Conclusion:
The CP reductions in May 2025 reflect simultaneous pressure from both supply and demand forces in the global LPG market. While the $5 decrease in propane is relatively moderate, the $15 drop in butane and the overall $11.50 fall in the LPG mixture price are significant. These changes may open opportunities for buyers to renegotiate contracts or secure favorable purchase terms, particularly in price-sensitive import markets.

Prepared by the Analysis Team
GGT Petrochemical