There is a significant decrease in LPG Price for Tongatapu and Vava`u for April 2013 compared to the price approved by the Competent Authority in December 2012. The retail price for Tongatapu have decreased by 0.08 seniti per kilogram to $4.58 seniti per kilogram (equivalent to 1.72% decrease) and retail price for Vava`u have decreased by 0.27 seniti per kilogram to $4.55 seniti per kilogram (equivalent to 5.80% decrease). The wholesale price for Tongatapu have decreased by T$80 per tonne to $4,144 per tonne or $4.14 per kilogram (equivalent to 1.89% decrease) and the wholesale price for Vava`u have decreased by T$272 per tonne to $4,118 per tonne or $4.12 per kilogram (equivalent to 6.20% decrease).
LPG price for April 2013 is mainly determined by the movement of Saudi-Contract prices during November 2012 and January-February 2013. For cargoes received in Tongatapu in January and February 2013, the average price (in US Dollars) is down by US$23/tonne compared to the previous quarter. Recommended wholesale prices have been calculated using the Tonga LPG Price Template updated based on TCA decisions on the Annual PLG Price Review report 2013. Template was updated using the June 2012 financial data and TCA agreed for a supplementary Annual LPG Price Review 2013 to be held in October 2013 when Tonga Gas financial data for 2013 is available.
The significant decrease in the LPG Price for Tongatapu and Vava`u for April 2013 is attributed to the following reasons:
· Prices have been relatively stable from September last year with a small downward trend in the first quarter of this year. Butane price averaged US$938/tonne in the first quarter, about 2.5% lower than fourth quarter last year.
- LPG prices dropped in February by US$45/tonne and another US$15/tonne in March due to warmer than normal winter weather fundamentals in the Northern Hemisphere.
- For cargoes received in Tongatapu in January and February the average price (in US Dollars) is down by US$23/tonne compared to the previous quarter. The Tongan Pa'anga has been relatively stable. Tonga Gas had switched supply to Geogas which does not charge premium although has a higher freight rate compared to Origin Energy which has resulted in an overall savings of US$42 and US$54/tonne for Tongatapu and Vava'u respectively.
- As a result of the change in supplier, the Annual Review and drop in the benchmark Saudi butane price, the delivered price of LPG to Tonga is down by TOP0.08/kg and TOP0.27/kg for Tongatapu and Vava'u respectively on the previous quarter.
Price reduction in Vava`u is more than price reduction for Tongatapu due to two main reasons; Vava'u only received a cargo from Geogas getting the full benefit of the reduction in supplier's price; secondly Vava'u received the final cargo of the quarter which was cheaper than the two earlier cargoes that only discharged in Tongatapu.
LPG prices are expected to drop further in the second quarter following crude oil as demand for LPG in summer is much lower compared to winter. The Saudi's have set the April butane price at US$835/tonne, down US$60/tonne from March 2013 which is the lowest since August 2012. If these prices hold through the remainder of the quarter Tongan LPG price will drop further at the end of the second quarter.
Issued by the: Ministry of Commerce, Tourism & Labour, 15 April 2013