Import Cost Rises Weigh down PDH Unit Profit & Import Arbitrage
The international LPG spot prices went up in September 2025, lifting China’s LPG import costs. Accordingly, PDH unit profits and LPG import arbitrage went down. Entering October, it is estimated that China’s LPG import costs may further go up. Meanwhile, China’s propylene supply may increase, but the downstream demand may weaken. Therefore, the PDH unit profits may remain negative. Besides, selling prices of imported LPG may see minor increments, so China’s LPG import arbitrage may underperform.
The international crude oil prices fluctuated downward in the first half of September, and China’s LPG import costs moved upward with higher premiums. Moreover, China’s industrial-use LPG demand was relatively strong, and the demand for civil-use gas in India and Southeast Asia improved. Accordingly, most market participants adopted bullish attitudes to the October CP. Meanwhile, the international freight remained high, propping up China’s LPG import costs.
In the first half of September, PDH unit profits further dropped, with the current loss level exceeding RMB -400/mt. During the first half of September, China’s propylene prices showed a trend of rising first and then falling. In early September, influenced by the periodic maintenance of some PDH units, the supply pressure on propylene market eased somewhat, leading to a slight upward shift in prices. However, with propylene prices rising, production pressure on downstream producers gradually increased. Accordingly, the overall operating rate of the downstream industry decreased, weighing down propylene demand and subsequently dragging down propylene prices. Given the rising propane import costs and minor increments in China’s propylene prices, it is estimated that China’s PDH unit profits may further weaken.
In the first half of September, China’s LPG import arbitrage became negative. In early September, driven by multiple factors including rising import costs, delayed import arrivals, and stronger willingness among sellers to push prices higher, selling prices of imported LPG went up. However, the end demand recovery was lower than expected, and some importers intended to cut selling prices to promote sales, weighing down China’s LPG import arbitrage.
The October CP may go up, and the premium may remain high. Accordingly, it is estimated that China’s LPG import costs may further rise. As for the PDH market, the overall propylene supply may go up, but downstream producers may experience production cost pressure. Accordingly, some downstream producers may shut unit down, weighing on the demand for propylene. Therefore, PDH unit profits may remain negative. In terms of the LPG import arbitrage, the improvement in civil-use gas demand may be lower than expected, so increments in selling prices of imported LPG may be limited. Accordingly, China’s LPG import arbitrage may underperform.
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