In the next three years, China’s liquefied petroleum gas (LPG) will show double growth in imports and demand.
On March 21, the 24th China LPG International Conference, co-sponsored by the Guangdong Oil and Gas Chamber of Commerce and the Guangdong Petroleum Society, was held in Suzhou.
“China’s LPG imports are expected to increase to 23-25 million tons in 2021.” Yan Jiasheng, vice president of Donghua Energy Co., Ltd. (002221.SZ), China’s largest LPG importer and distributor, said at the meeting that China’s LPG demand will increase steadily in the next three years with the promotion of the Sixth National Standard Petroleum and the centralized commissioning of the propane dehydrogenation (PDH) cracking unit.
According to his forecast, China’s LPG imports will increase by 20% to 30% in 2021 compared with 2018.
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In 2018, as the world’s largest LPG importer, China’s LPG import volume was about 19.16 million tons, up 11.5% year-on-year, accounting for more than 1/3 of the total apparent consumption of LPG.
According to Zhongyu data, in 2018, China produced about 38,005,000 tons of LPG, up 11.2% year-on-year.
LPG, also known as liquefied gas, is a kind of gas that volatilizes during the exploitation of oil, natural gas or the extraction of crude oil. It is a mixture of propane and butane, usually accompanied by a small amount of propylene and butene.
LPG is mainly used for civil fuels, alkane cracking, PDH to propylene and so on. The canned gas used in rural areas and towns is usually LPG.
“At present, the import price of LPG in China is higher than that in other parts of Northeast Asia.” He Yanyu, head of pricing for global NGL (natural gas liquids) at IHS Markit, a global industry information service provider, said that in recent years, the correlation between LPG and global crude oil price fluctuations has been increasing, and the attribute of LPG as a “by-product” of crude oil has been strengthened.
In 2018, Saudi Arabia’s propane exports to China were priced at $540 per ton, an increase of 14.9 per cent over the same period last year.
“The sanctions imposed on Iran will lead to the reduction of LPG exports in the Middle East and a global pattern dominated by LPG supply in North America.” Emma Lamb, chief consultant of NGL Strategy, said that the Asian market was the dominant market for LPG consumption.
In 2018, global LPG supply was 300 million tons, an increase of 3.7% year on year. Depending on abundant crude oil production, the Middle East is the second largest LPG export area after North America.
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“In 2019, as the world’s largest exporter of LPG, the impact of the United States on the price and volume of LPG trade will be strengthened day by day.” He Yanyu said that influenced by China’s trade tariff policy with the United States, China has reduced its imports of LPG from the United States. To meet demand, Chinese buyers will choose to buy more Middle East spot goods.
On August 23, 2018, China began imposing a 25% tariff on imports of liquefied gas from the United States.
“The persistence of tariff collection has prompted the collection of LPG’s'exchangeable’market.” Yan Jiasheng said that by exchanging contracts, Chinese LPG importers “transitioned” their original LPG contracts with the United States to other Asian countries such as Japan and South Korea, and sought to buy more LPG from the Middle East, Australia and West Africa.
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