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LIQUIFIED PETROLEUM GAS
What is LPG?
LPG, also known as Liquefied Petroleum Gas, is a gas under normal temperature and pressure. LPG's main components are Propane (C3H8) and Butane (C4H10) which occur naturally in crude or from refining processes such as crude distillation, catalytic reforming or hydrocracking. LPG is liquefied by reducing temperature or increasing pressure for ease of transportation and storage.
Commonly used for recreational and leisure applications, such as central heating, air-conditioning and refrigeration, LPG is also used in the industrial production and manufacture of ferrous and non-ferrous metals, gas and chemicals, glass and vehicles. Because of its mobility, LPG is more versatile than natural gas and can also be used in other areas such as agriculture and as fuel.
Trading LPG
Ginga provides Over-The-Counter (OTC) broking services for LPG.
In June 2004, Ginga launched a new trading contract, called the LPG Far East Forward. This contract enables the forward delivery of physical tonnage. The key contract details are as follows:
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Products: Propane and Butane
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Contract Size: 22,000t of Propane (+/- 5pc) or 11,000t Propane/ 11,000t Butane (+/- 5pc)
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Pricing in US$/per Metric Ton
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Delivery: CFR, either first half month or second half month
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Origin: Propane & Butane : Algeria (Bethioua), Australia (Kwinana, Port Bonython, Port Dampier, Westernport), Bahrain (Sitra), Indonesia (Bongang), Iran (Bandar Imam Khomeini), Kuwait (Mina Al-Ahmadi), Malaysia (Tanjung Sulong), Nigeria (Oso), Norway (Kaarstoe), Qatar (Mesaifeed, Ras Raffan), Saudi Arabia (Ras Tanura, Ju’Aymah, Yanbu), U.A.E. (Das Island, Hamriyah, Jebel Ali, Ruwais).
* For above Algeria (Bethioua) & Malaysia (Tanjung Sulong) for Propane only.
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Specifications: Original supplier’s guaranteed specifications
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Vessel age: 25 years maximum
The two basic categories of trading LPG Far East Forward are:
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Forward
This is defined as a standardized contract used to sell and buy in the future at an agreed price today. A forward contract can be used for physical transactions or as a financial instrument without physical delivery. -
Fixed Price Outright
A forward contract whereby the price is fixed. -
Index Price Outright
A forward contract whereby the price is not fixed at same specific level but is linked to Index. -
Time Spread
This heading instrument enables traders to lock in the price differentials between the same products but for two different periods.
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Paper Swaps
A paper swap is an agreement to settle in cash the difference between the fixed price of a derivative now and its floating price at a future period. There is no physical delivery.
