First trade for Argus China LPG swap

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Apr 21, 2022, 04:51 ET

BEIJING, April 21, 2022 /PRNewswire/ -- The first swap for LPG priced against the Argus Ningbo Index, covering propane delivered at the eastern Chinese port of Ningbo, was traded on 20 April.

Swaps are a risk management tool enabling buyers and sellers to lock in a profit margin and protect themselves against unfavourable price movements. Argus Ningbo Index swaps were launched by US based Intercontinental Exchange (ICE) on 28 March.

Argus launched physical price assessments for propane and butane delivered to Ningbo in January 2021 at the request of industry participants. China is the world's largest consumer of LPG, accounting for more than a fifth of global seaborne trade. Demand for LPG has been fuelled by the construction of more than 20 propane dehydrogenation (PDH) petrochemical plants in China, which use LPG as a feedstock.

Companies operating in China had requested that Argus develop a new price to represent LPG delivered to China specifically, as an alternative to them using a more regional benchmark that reflected market conditions in more than one country. They also called for the development of a related swap so that they could hedge their exposure.

"We are delighted the Argus CFR Ningbo-settled contract, launched only last month on ICE, has already begun to trade," Argus Media chairman and chief executive Adrian Binks said. "The Chinese LPG market is huge and rapidly growing, and it is appropriate that it should have its own physical pricing and hedging tools that reflect domestic conditions."

The swap traded for 1,000 tonnes at $840/t for June, between a Chinese importer and a bank.

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Argus is an independent media organisation with more than 1,100 staff. It is headquartered in London and has 26 offices in the world's principal commodity trading and production centres. Argus produces price assessments and analysis of international energy and other commodity markets and offers bespoke consulting services and industry-leading conferences.

Companies in 140 countries around the world use Argus data to index physical trade and as benchmarks in financial derivative markets as well as for analysis and planning purposes.

Argus was founded in 1970 and is a privately held UK-registered company. It is owned by employee shareholders, global growth equity firm General Atlantic and Hg, the specialist software and technology services investor.

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