.

In the immediately preceding week, prices on the international and domestic markets for LPG saw an increase.

Key Development in Nigeria's LPG Market
International(Mont Belvieu) prices of LPG slightly rose in the middle of the preceding week but price slightly fall compared to the previous day

Prices of LPG at the depot level showed a slight decrease compared to the previous week: In contrast with the previous week under review, the price gap between Mont Belvieu and depot prices is marginally narrower.

Compared with the previous week the gap between depot prices per kg of LPG and retail prices in Nigeria has not changed much. The retail prices remain stable during the week, unlike the depot prices.

Regional discrepancies continue to exist in the retail prices of LPG within the region.

Regional Disparity in Retail
A frequent feature of the Nigerian LPG market has been the regional variance in the price of LPG across the country. Since the geographic zone of the South-East hosts the vast majority of depots in the country, prices in the region have been higher compared to the South-West.

Macroeconomics Condition and the LPG Market

The official exchange rate of the naira to the US. $ has remained at the pegged price of N380 to US.$1 throughout the week (Figure D).

Nigeria's foreign reserve continues to fall as a result of capital outflow due to the effect of the second phase of Covid-19 and unstable nature of oil price in the international market

The current CBN Purchasing Managers Index (PMI) for the gas sector records a decrease in November for new orders in the supply segment of power, gas, steam & air conditioning, while business activities and jobs & inventory were contracted in the same month. In the corresponding value chains, the decreasing trend in market activities and jobs & inventory signals a contraction in demand.

There is also high inflation. The persistent increase in inflation over the past 12 months (14.89% in November, 14.23 in October, 13.7 %in September, 13.2 %in August, 12.8 %in July, 12.6 % in June from 12.4 %in May 2020) is increasingly reflected in the country's higher LPG prices. More specifically, the composite food index rose from 16.16% in September and 16.0% in August to 17.38 % in October, 15.48 % in July 2020 compared to 15.18 %in June 2020.

Prices of crude oil in the international market in the week under review showed a rising trend. However, the price later fall at the end of the week (Figure E).

Outlook: Coming Weeks
We expect LPG prices to continue to rise in the coming days as the yuletide season approach and inflation continue to rise.


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