A late burst of wintry weather in Northwest Europe is giving trading in the inland spot market for propane a boost after a season of lower-than-expected demand, according to market sources.

“German middle men are covering as I think we all thought winter was done,” a market source said.

That has resulted in more spot buying, with some refineries in the Amsterdam-Rotterdam-Antwerp trading hub on the buyside to cover their contract commitments, some sources said.

That demand has increased trading in ARA, even though the price reaction has been slow on the markets for rail cars, trucks and barges to serve the inland European markets.

On Monday, the barge market was at a $36/mt premium to the CIF large cargo market, while the rail car and truck market were at a $46/mt premium, both of which are in the middle of the range since the start of the year.

Those markets have struggled with thin buying interest over the winter due to relatively mild temperatures, after the winter buying pick-up was initially expected to start in November. That has been matched by what sources say has been thin supply from ARA-based refineries, which has kept the market relatively balanced despite weak demand.

Market participants have long been predicting that the inland market could finally see a demand jump in February, if cold temperatures coincided with the start of maintenance season at several German refineries, including the Miro refinery in Karlsruhe, in southern Germany, which is expected to be undergoing work until around Easter.

However, the cold spell may still be insufficient to kick-start a market that has been struggling to launch for months, other sources say. Buyers were well prepared for the German maintenance season, and demand is also dependent on the cold weather lasting for at least a couple weeks to run through stocks, sources say.

“If next week is 15 [degrees Celsius], then it is another story,” a source said.

Source:Platts

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