Propane prices have experienced a slight increase, marking a marginal hike from $610 per tonne to $620 per tonne. This marginal hike is a positive development for Gujarat Gas. The shares of Gujarat Gas settled 4.83% up at ₹483.80 a piece in the session on Monday. It has gained over 9 percent in the last month.
Over the past six months, propane prices have witnessed a significant upswing, reaching a low point of approximately $440 per tonne in July and displaying a consistent upward trajectory since then.
The positive impact on Gujarat Gas stems from the fact that propane serves as a competitor to the company's products. With the rise in propane prices, the demand for Gujarat Gas is expected to increase, thereby benefiting the company.
A more significant factor contributing to Gujarat Gas's favourable position is the notable decrease in spot LNG prices. The decline in crude prices and the global trend in gas prices, have led to a substantial drop in spot LNG prices. In November, spot LNG prices were at $17 per British thermal units (MMBtu), but they have now cooled off to around $11 per MMBtu.
This shift is particularly beneficial for Gujarat Gas because a significant portion of its sourcing relies on spot LNG, as opposed to entities like Mahanagar Gas (MGL) or Indraprastha Gas (IGL), which primarily rely on domestic gas sources.
The reduced spot LNG prices further contribute to the positive outlook for Gujarat Gas. Consequently, the stock has experienced a significant uptick in response to these favourable market dynamics.
(Edited by : Sangam Singh)
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