April Recap - European LPG

European LPG unwound part of March's war risk premium following the 7 April US-Iran ceasefire that briefly reopened the Strait of Hormuz, but propane and butane diverged on differential supply security. NWE propane fell to $650.43/MT avg (-8.84% MoM, -19.3% open-to-close), with the largest single-day drop of -$63.25/MT on 8 April resetting the curve. NWE butane held at $848.04/MT (+6.30% MoM, -4.2% open-to-close), as Asian structural demand kept global butane balances tighter than propane.

The propane-butane spread inverted from +$35/MT (March) to -$124/MT (April), a $159/MT swing. Propane-naphtha collapsed to -$338/MT at month-end — the widest in the visible series — as naphtha held a stickier premium given heavier Hormuz exposure (the IEA reported LPG/ethane and naphtha exports through Hormuz still down 1.8 mb/d in April), while NWE propane was underwritten by record US transatlantic flows and US inventories near five-year highs (EIA). The forward curve is the cleanest signal: front collapse, with physical premium over swaps falling from +$94/MT (1 Apr) to +$7/MT (29 Apr), confirming the squeeze resolved rapidly while the back curve held residual risk. With the ceasefire described as two-week by the IEA, May hinges on whether Hormuz flows resume durably.

Price Action

Propane NWE CIF opened $672.00/MT (1 Apr),closed $680.00/MT (29 Apr); avg $650.43/MT vs March's $713.51/MT (-$63.08,-8.84% MoM); intra-month range $130.25/MT vs March's $310.50/MT.
Butane NWE CIF opened $920.50/MT, closed $882.25/MT; avg $848.04/MT vs March's $797.75/MT (+$50.29, +6.30% MoM);intra-month range $347.00/MT.
Propane high $716.00/MT on 7 Apr (eve of ceasefire); low $585.75/MT on 17 Apr; W4 recovery to $642.83 avg failed to reclaim W1's $700.58.
Butane high $1,032.50/MT on 7 Apr; low$685.50/MT on 17 Apr (identical timing to propane), but butane reclaimed $882.25 by close vs propane's $680.
Largest single-day moves on 8 Apr (the session after the ceasefire announcement): propane -$63.25/MT (-8.83%), butane-$149.75/MT (-14.5%); the war premium reset in a single day.
YoY comparison unavailable (no NWE LPG prompt data for April 2025 in the GX series).

Cross-Market Dynamics

Propane-naphtha avg -$217.88/MT in April vs -$22.89 in March; opened -$100.75 (1 Apr), closed -$338.00 (29 Apr). The close is well outside the prior 6-month range of -$22 to -$94/MT.
Propane-Brent avg -$61.89/BBL vs -$36.31 in March — the widest discount in the visible 7-month series. With Brent supported by the war premium and propane unwinding it, the LPG complex priced a clean dislocation from crude.
Propane-butane flipped from +$35.09/MT (March avg, propane premium) to -$123.59/MT (April avg, propane discount); a $158.68/MT swing.

Cross-Regional Dynamics

Propane NWE-Mont Belvieu arb avg +$324/MT in April vs +$437 in March; arb compressed by $114/MT MoM but stayed strongly positive [Second bullet point]
Butane NWE-Mont Belvieu arb avg +$363/MT vs +$295 in March; arb widened by $68/MT MoM, consistent with NWE butane's relative resilience.
Within April, NWE and Mont Belvieu moved in opposite directions: Mont Belvieu propane rallied +17.0% open-to-close (0.71875 → 0.84125 $/gal), Mont Belvieu butane +14.1%, while NWE propane fell -19.3% and NWE butane -4.2%. The compression came from both sides.

Curve Structure

Pattern: front collapse. The M1-M6 backwardation roughly doubled into April open ($67 → $133/MT) as the war premium loaded into the front; by month-end it compressed to $75.50/MT as the back rallied $65.50/MT while M1 only gained $8/MT. Front led the unwind.
The cleanest signal is the physical premium over the swap (GX0000737): from +$94/MT on 1 Apr to +$7/MT on 29 Apr — a 93%compression. Physical tightness that drove the spike resolved within the month; swaps retained more residual risk premium.
M1-M2 compressed most aggressively (+$69 → +$32,-54%): the most prompt-sensitive part of the curve was the most transient, consistent with a supply shock priced as near-term.
Implication: storage economics improved sharply through the month as the prompt cleared; carry trade reactivates if the M1-M6 backwardation compresses further. If Hormuz flows fail to normalise, expect the back curve to reprice up — shifting the pattern from front collapse toward back repricing.

Price Volatility

Propane CV at 12.98% is 4.2x the Nov-Feb baseline of 1.77-4.83%; the unwind drove larger relative volatility than the buildup [Second bullet point].
Butane CV moderated to 10.06% from March's 16.49% but remained 4-5x the Nov-Feb baseline; March's 16.49% was driven by the absolute price doubling within the month.
Implication: hedging models calibrated to the Nov-Feb 2-5% CV regime are underestimating current risk by ~4x. Elevated CV should be assumed as the baseline while Hormuz remains a binary catalyst.

Something to Watch

Strait of Hormuz status as the binary catalyst:
- Observation:The 7 April ceasefire is described by the IEA as two-week, with Hormuz LPG and naphtha flows still 1.8 mb/d below pre-war levels in April.
- Why it matters: durable resumption pulls naphtha down toward LPG and likely closes the propane-naphtha spread back toward the prior -$22 to -$94/MT range; breakdown re-bids the entire complex with naphtha leading. Either outcome moves propane $100-200/MT from current levels.
- What to monitor: weekly Kpler/Vortexa Hormuz transit volumes; ceasefire extension or breakdown; QatarEnergy force majeure status on LNG as a proxy for the broader disruption picture.
Physical premium over swap as the curve-pattern signaL:
- Observation: physical premium closed April at+$7/MT, near-zero, after opening at +$94/MT.
- Why it matters: a re-widening back above $50/MT would signal the prompt squeeze is reasserting (likely Hormuz-driven) and front collapse is reversing toward bull steepening; sustained near-zero confirms the squeeze has cleared and the back curve will unwind next, shifting the pattern toward broader curve normalisation.
- What to monitor: daily GX0000737 (propane physical vs swap differential); M1-M2 swap spread (currently +$32/MT) as the secondary canary.
Propane-butane spread as the regional rebalance signal:
- Observation: spread closed April at -$195.25/MT, the most negative reading in the visible 7-month window.
- Why it matters: a sustained widening past-$200/MT forces European flexi-crackers to maximise propane intake at butane's expense, eventually clearing the propane length and supporting prices; compression back toward parity signals Asian butane demand has cooled, removing the structural support.
- What to monitor: weekly NWE propane-butane spread (GX0000738); Chinese PDH operating rates and butane-cracker run rates as the Asian demand canary.