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LPG PRICE TRENDS FOR 2023 - LPG IN NIGERIA'S REPORT

LPG PRICE TRENDS FOR 2023 - LPG IN NIGERIA'S REPORT
LPG PRICE TRENDS FOR 2023 - LPG IN NIGERIA'S REPORT

INTRODUCTION


The year 2023 witnessed a roller-coaster ride for cooking gas prices in Nigeria, marked by significant fluctuations influenced by a myriad of market dynamics and governmental policy changes. This comprehensive overview delves into the monthly price variations, the underlying factors impacting these fluctuations, and the interplay between international and local markets, with a focus on the Mont Belvieu propane-butane prices. Additionally, we will explore the role of key governmental decisions, exchange rate variations, and the consistency of average prices throughout the year.


MONTHLY PRICE FLUCTUATIONS


January: The year kicked off with the average price settling at ₦802 per kg and ₦10,025 for 12.5 kg, setting a substantial starting point.


February: A slight decrease was observed, with prices dropping to ₦787 per kg and ₦9,837.5 for 12.5 kg.


March: A marginal increase followed, with prices rising to ₦803 per kg and ₦10,037.5 for 12.5 kg.


April: The trend continued with another increase, reaching ₦821 per kg and ₦10,262.5 for 12.5 kg.


May and June: The landscape changed significantly in May when the removal of fuel subsidies had a visible impact on LPG prices. May saw a notable decrease to ₦733 where 12.5kg LPG sold for ₦9,162, followed by a further drop to ₦665 in June, 12.5kg of LPG sold for ₦8,312. The prices of LPG dropped drastically mainly because of the President Tinubu taking the mantle of Presidency in Nigeria and also his immediate act of removing fuel subsidy. The exchange rate at these times were also quite reduced which could have triggered the decrease in LPG prices. In May the Average exchange rate was ₦461.3928. 


July and August: The market adjusted gradually, witnessing a slight increase to ₦699 per kg in July and ₦8,737 and ₦753 and ₦9,412 in August.


September to December: A more substantial climb ensued, reaching ₦896 per kg and ₦11,200 for 12.5 kg in September, soaring to ₦995 per kg and ₦12,437 for 12.5 kg in October, and peaking at ₦1,055 per kg in November before closing at ₦980 per kg and ₦12,250 for 12.5 kg in December.


FACTORS INFLUENCING FLUCTUATIONS


The fluctuations were influenced not only by market forces but significantly affected by pivotal governmental changes. The removal of VAT and import duty on imported LPG, coupled with the removal of fuel subsidies, played a vital role in reshaping the trajectory of LPG prices. The intricate relationship between governmental policies and market responses was evident throughout the year.


CONSISTENT AVERAGE PRICE AMIDST FLUCTUATIONS


Despite market shifts and policy alterations, the calculated average for 2023 remained relatively stable at approximately ₦749.33 per kg. This average provided a consistent reference point amidst varying monthly prices.


MONT BELVIEU PROPANE-BUTANE PRICE OVERVIEW - JANUARY TO DECEMBER 2023


The Mont Belvieu propane-butane market displayed dynamic shifts each month, influenced by global economic conditions and geopolitical factors. Prices reflected the delicate balance between increased oil supply, China's economic recovery, and geopolitical tensions. The inter-connectedness of global and local LPG markets was evident as local prices in Nigeria responded to international trends.


Key Trends and Observations


January 2023: Propane at $384.7 USD/MT and Butane at $457.4 USD/MT; influenced by China's rising COVID-19 cases and a weak global economic outlook. 


February 2023: Propane decreased by 11.75%, and Butane by 0.43%; impacted by increased oil and gas inventories and lower oil prices. 


March 2023: Propane increased by 9%, Butane decreased by 18%; strong rebound in Butane, propane influenced by U.S. interest rates and Silicon Valley Bank issues. 


April 2023: Upward trend with 5.95% increase in Propane and 5.97% increase in Butane; influenced by growing fears of demand destruction amid economic concerns. 


May 2023: Persistent bearish trend with a 7% decrease in Propane and 10.4% decrease in Butane; negative economic data from the US and China. 


June 2023: Continued bearish run; Propane decreased by 5.85%, Butane by 6.25%; influenced by OPEC hints at potential production cuts.


July 2023:

Week of July 7th: Propane increased by 0.8%, Butane by 3.4%; rebound with higher weekly averages.

Week of July 14th: Propane increased by 12.3%, Butane by 14.2%; consecutive higher weekly averages.

Week of July 22nd: Propane increased by 4.6%, Butane by 6%; upward trend confirmed.

Week of July 28th: Propane increased by 2.5%, Butane by 4%; continued rise, speculation of hitting $400 USD/MT.


August 2023:

Week of August 4th: Significant surge with 8.9% increase in Propane and 8.1% increase in Butane; biggest jump since July.

Week of August 11th: Sluggish movement, with a 0.4% decrease in Propane and 0.4% increase in Butane; oil market uncertainty.

Week of August 18th: Significant tumble with 11.8% decrease in Propane and 7.4% decrease in Butane; global economic concerns impact oil market.

Week of August 28th: Retracement observed, with a 3% increase in Propane and 0.4% increase in Butane; lower-than-expected crude inventories.


September 2023:

Week of September 1st: Massive price increases with 6.2% increase in Propane and 5.9% increase in Butane; bullish trend fueled by lower oil inventories and production cuts.

Week of September 8th: Mixed movements with 7.1% increase in Propane and 3.1% increase in Butane; bullish oil market supported by production cuts and Chinese demand.

Week of September 15th: Unwavering bullish trend with 4.9% increase in Propane and 3.3% increase in Butane; oil price rally driven by OPEC decisions.

Week of September 22nd: Further escalation with 5.8% increase in Propane and 6.2% increase in Butane; geopolitical tensions amplify market uncertainties.


October 2023:

Week of October 6th: Bearish turn with 3.7% decrease in Propane and 3.9% decrease in Butane; market correction amid concerns over global economic slowdown.

Week of October 13th: Continued bearish sentiment with 2.2% decrease in Propane and 1.8% decrease in Butane; demand concerns prevail.

Week of October 20th: Temporary relief with 1.5% increase in Propane and 1.2% increase in Butane; short-lived as market fundamentals remain weak.

Week of October 27th: Bearish trend intensifies with 4.6% decrease in Propane and 3.7% decrease in Butane; persistent global economic worries.


November 2023:

Week of November 3rd: Sharp uptrend with 8.5% increase in Propane and 9.2% increase in Butane; unexpected production outages and geopolitical tensions.

Week of November 10th: Bullish momentum continues with 6.1% increase in Propane and 7.8% increase in Butane; OPEC+ decisions and supply disruptions.

Week of November 17th: Peak prices reached with 12.2% increase in Propane and 11.5% increase in Butane; geopolitical tensions escalate, supply constraints intensify.

Week of November 24th: Slight pullback with 2.3% decrease in Propane and 1.9% decrease in Butane; profit-taking amid holiday season.


December 2023:

Week of December 1st: Bearish correction with 5.8% decrease in Propane and 4.3% decrease in Butane; year-end profit-taking.

Week of December 8th: Continued downward trend with 4.1% decrease in Propane and 3.6% decrease in Butane; market reassessment and profit booking.

Week of December 15th: Stabilization observed with marginal changes in Propane and Butane prices; year-end market calm.

Week of December 22nd: Minimal movements with slight increases in Propane and Butane prices; market winding down for the holiday season.


CONCLUSION


The dynamics of cooking gas prices in Nigeria in 2023 were a reflection of the intricate interplay between global and local factors. Market forces, governmental policies, and international trends collectively shaped the trajectory of prices throughout the year. The consistent average price masked the underlying volatility, providing both challenges and opportunities for consumers, distributors, and policymakers. This fluctuation was affected not only by market dynamics but also by pivotal changes such as the removal of VAT and import duty on imported LPG and equipment in Nigeria. The removal of these levies, combined with the fuel subsidy removal, played a role in reshaping LPG prices, reflecting the interplay between government policies and market responses throughout the year.


In our recurrent surveys and data analysis, the calculated average price for 2023 points to an approximate of ₦749.33 Naira per KG as the consistent rate for LPG or cooking gas throughout the year. As the new year unfolds, stakeholders in the LPG industry will undoubtedly keep a close eye on global developments and governmental decisions that may influence the trajectory of cooking gas prices in Nigeria in 2024.


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Oluwabukola Jimoh

Oluwabukola Jimoh

Oluwabukola Jimoh is a dynamic academic writer and captivating energy blogger. She is able to delve into intricate subjects with an insatiable thirst for knowledge, crafting thought-provoking essays that engage and enlighten her readers.  

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