MARKETS: Rocket propellant index falls 1.63% as hydrogen retreats

(SpaceEnergy) The SE Liquid Rocket Propellant Index (SELRPI) fell 1.63% in the week ending 28 August to 104.31 points as all three propellant sub-indices weakened.

The principal driver was the SE Hydrogen Index (SEHI), which dropped 2.94% on the week to 116.75 points from 120.29, reversing part of its strong August gains.

Hydrogen costs remain exposed to natural gas and electricity markets, while the underlying European gas balance remained tight.

European benchmark TTF gas futures remained sensitive to geopolitical developments.

An analyst with a German energy company told SpaceEnergy any progress towards peace in the Middle East could be bearish for prices. But the market was still “structurally tight” while awaiting increased Qatari flows, he noted.

The US-Iran war, since late February, has resulted in severe disruption to around 20% of global liquified natural gas supply, via the Strait of Hormuz.

“The risk is still to the upside, as we are also still in the midst of the Norwegian [gas field] maintenance period,” the analyst said, regarding EU market demand.

“LNG imports are rising, but we still need to inject into storage [ahead of winter],” he said.

An analyst with a Swiss trading firm was more bullish, pointing to escalating geopolitical tensions and diminishing expectations of a peace agreement as summer ends and the European winter approaches.

“Indeed, the escalation is real, with no prospects of a peace agreement,” the analyst said, adding that the market's previous expectation that tensions could ease was unlikely to persist.

The SE Kerosene Index (SEKI), the largest component in the basket, declined 1.70% to 101.58 points. Oil-product markets nevertheless remain exposed to tight physical supply, with the IEA saying jet fuel has been particularly affected by Middle East disruption.

The SE Methalox Index (SEMI) recorded the smallest move, easing 0.63% to 100.72 points. Despite the weekly decline, constrained Gulf LNG flows, European storage requirements and geopolitical risks leave methane costs exposed to renewed upward pressure.