Canadian Propane Tanker Resold Five Times at Sea Amid Asian Fuel Scramble
A large tanker carrying Canadian propane was resold to new buyers at least five times before it even reached its destination after departing from the British Columbia coast last month. This unusual trading activity signals a frantic scramble for fuel in Asia, driven by the ongoing war in the Middle East and resulting supply disruptions.
Unprecedented Trading Activity
While Canadian propane cargoes are occasionally resold while in transit, multiple trades of a single shipment are highly unusual. The cargo, originally bound for China when conflict broke out, was bought and resold at least five times on the spot market, fetching a steep premium to the Asian propane benchmark according to industry reports and market sources.
"If you can't get your propane supply from the Middle East because the Strait of Hormuz is blocked, you'll be looking wherever you can find it elsewhere," said Alex Munton, director of global gas research at energy analysis firm Rapidan Energy Group.
Munton explained that "It's not just that prices are up; there's also an incredible amount of volatility. The value of that cargo is yo-yoing as it's on the water and that creates opportunities and opportunistic trades as it's making its way to its ultimate destination."
Asian Fuel Shortage Intensifies
Asian markets are facing an acute shortage of propane, butane, diesel and jet fuel as vessel traffic through the Strait of Hormuz has slowed to a trickle amid fighting in the region. This disruption has created what analysts describe as the largest energy disruption the world has ever seen.
The marine traffic data reveals that the tanker carrying 600,000 barrels of propane from AltaGas Ltd.'s export terminal near Prince Rupert, B.C., departed Canada shortly before the February 28 attack on Iran that shut a key shipping route for Middle East energy exports. The vessel eventually arrived in China on Friday.
Canada's Growing Propane Export Industry
Similar to liquefied natural gas (LNG), Canada's propane exports are refrigerated or pressurized into liquid form and shipped in specialized tankers for the nine-to-eleven day voyage to Asia. Most Canadian propane exports are sold under long-term contracts to buyers in countries such as Japan, China and South Korea, where the fuel is widely used for cooking and heating.
The fuel is sourced mainly in Alberta and northwestern B.C. as a byproduct of natural gas production and shipped by rail to the coast. Canada's growing propane trade to Asia is increasingly viewed as an important part of Ottawa's push to diversify energy exports beyond the United States.
Market Premiums and Future Expansion
At least two Canadian propane cargoes—including the shipment that changed hands five times while at sea—recently sold to Asian buyers at premiums of US$100 to US$170 per tonne above benchmark prices, according to price-reporting agency Argus.
While analysts and industry participants say Canada has little ability or capacity to expand energy exports in the near term to help ease the looming global supply shortage, the country's small but growing propane export industry is expected to benefit from higher prices.
AltaGas is currently building the first phase of a new export terminal near Prince Rupert that will add an initial 55,000 barrels per day of propane and butane export capacity by the end of 2026.
Opportunistic Trading Patterns
The unusual trading activity suggests Asian buyers may be scrambling for supply outside of the Middle East, according to market watchers. Some buyers who do not immediately need the supply will occasionally resell cargoes while they are still in transit to capitalize on rising prices in other markets.
This pattern of opportunistic trading reflects the broader volatility in global energy markets as geopolitical tensions continue to disrupt traditional supply chains and create new opportunities for alternative suppliers like Canada.
