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(Adds context, details on cancellations)
By Liz Hampton and Julia Payne
HOUSTON/LONDON, July 12 (Reuters) - A plunge in liquefiedpetroleum gas (LPG) prices has prompted at least five companies,including Vitol, Gunvor and Shell,to cancel cargo loadings from terminals on the Texas Gulf Coastfor the month of July, several trading sources said this week.
BP and EDF Trading also cancelled vesselloadings, the sources added, speaking on the condition ofanonymity.
Backing out of a purchase can incur a penalty of up to $1million or more, but proceeding with the purchases could generate much higher losses, according to the sources.
Representatives for the companies either declined to commentor did not immediately respond to requests for comment.
The companies have long-term contracts to pick up LPG nearHouston. Those contracts can last years, in some cases extendinga decade.
At current prices, the cargoes booked through thosecontracts are money losers because the companies locked in aprice for their propane at a 12-cent to 15-cent a gallon premiumto the Gulf Coast propane benchmark price, the sources said.
For some deals, that is a whopping 10 cents above thecurrent spot market premium, which has recently been seen atlows of 3.6 cents to 3.85 cents a gallon over the propanebenchmark, two of the sources said.
Prices for Gulf Coast propane, which traded on Tuesday atabout 50.5 cents per gallon, are about half of what they weretwo years ago.
A Very Large Gas Carrier (VLGC), the largest ship used totransport LPG, can carry up to 550,000 barrels, or 23 milliongallons, of product.
Enterprise Products Partners, which operates aterminal in Houston with capacity to export up to 16 millionbarrels per month of LPG, declined to disclose informationrelated to the movement or status of cargoes.
Targa Resources, operator of the Galena Park exportterminal near Houston, did not immediately respond to a requestfor comment.
In October 2015, nationwide propane inventories topped 100million barrels, the highest level on record. Traders andproducers have expected robust exports to soak up a chunk of thesupply. (Reporting by Liz Hampton in Houston and Julia Payne in London;Editing by Terry Wade and Tom Brown)
