China Mar LPG Import Arrivals See M-O-M Rise over 45%
According to SCI’s shipment data, China’s LPG import arrivals were about 2,881.5kt in March 2024, up 45.16% M-O-M and mainly influenced by import costs, operating rates of deep-processing units, etc. The demand for industrial-use gas may improve in April. Given the relatively high port inventory, it is estimated that China’s LPG import arrivals may inch down in April.
According to SCI’s shipment data, China’s LPG import arrivals were 2,881.5kt in March 2024, up 896.5kt or 45.16% M-O-M and up 793.9kt or 38.03% Y-O-Y. Influenced by relatively low import costs and new PDH unit startups, China’s LPG import arrivals increased notably M-O-M.
According to SCI’s alkane deep-processing unit operating rates, the monthly average operating rate butane dehydrogenation units declined dramatically, and that of PDH units inched down in March. Therein, the operating rate of PDH units was 67.03% in March 2024, down 1.06 percentage points M-O-M, and the operating rate of butane dehydrogenation units decreased to 75.33%. Meanwhile, the operating rate of MA units was 75.68%, up 5.29 percentage points M-O-M, and that of light ends crackers remained at 92%. In terms of the LPG deep-processing demand, the consumption of LPG from deep-processing industry in March 2024 rose M-O-M, as new PDH units came online, and producers needed to stock up in advance.
Taking the PDH industry as an example, the PDH industry experienced a monthly average profit loss of RMB 303/mt in March 2024, down RMB 46/mt M-O-M. China’s propane import costs were relatively stable in March, so the PDH feedstock costs remained largely stable. Meanwhile, the overall propylene market underperformed, dragging down PDH unit profits. In terms of the import arbitrage, China’s average LPG import arbitrage was RMB -4/mt in March. Selling prices of imported LPG in China averaged RMB 5,173/mt, down RMB 54/mt or 1.03% M-O-M. China’s LPG import arbitrage was positive and then became negative, and the monthly average import arbitrage was RMB -4/mt. China’s LPG import costs inched down with the decline in premium. Selling prices of imported LPG inched up at the beginning of March, as the overall March CP was higher than expected. Given tepid downstream demand and high import arrivals, the overall supply and demand fundamentals underperformed. Accordingly, selling prices of imported LPG rose and then went down, and China’s LPG import arbitrage was positive in H1 March and became negative from mid-March.
China’s LPG import costs in March 2024 declined somewhat. Most overhauled units in the Middle East were restarted, and refineries in the U.S. intended to cut stock, so the international LPG premium narrowed, dragging down China’s LPG import costs. The procurement enthusiasm for spot resources strengthened. Meanwhile, China’s LPG demand saw limited improvements, so China’s LPG port inventory increased notably in March.
It is estimated that China’s LPG import arrivals in April will probably decline M-O-M. The current LPG port inventory is relatively high, and most market participants may adopt bearish attitudes to the LPG market, weighing on the procurement enthusiasm. Given the PDH capacity expansion, it is estimated that the demand for LPG from the PDH industry may improve. Meanwhile, China’s LPG import costs may remain low. Accordingly, it is estimated that China’s LPG import arrivals may go down but remain high in April 2024.
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