Sep East China LPG Import Arrivals Surpassed 1 Mt
According to SCI’s data, the overall LPG import arrivals in East China reached 1,050.1kt as of September 26, occupying about 30.6% of the total. In general, the LPG import volume in East China is relatively high. With the notable increment in import arrivals, the LPG import market in East China attracted more eyeballs.
In recent years, there were more LPG importers in East China, so the overall LPG import arrivals in East China increased notably. In September 2022, the LPG import arrivals surpassed 1 million mt. With the downstream demand improvement, it is predicted that the proportion of the LPG import in East China will continue to rise, and it is likely to become an important indicator to reflect China’s LPG import and inventory change. Besides, the LPG import arrivals in East China may influence China’s civil-use gas prices.
China’s LPG import ramped up with downstream demand rising rapidly.
In recent years, China’s alkane deep-processing capacity rose quickly, driving up China’s LPG import. As of 2022, China’s PDH capacity surpassed 10 million mt/a. Moreover, it is predicted that China’s newly added PDH capacity will reach 6,000kt/a. Besides, some butane dehydrogenation units and crackers also need take high-quality LPG as feedstock. However, China’s LPG production is limited, and the product quality is average. Therefore, China’s LPG import moved upward.
According to GACC, China’s LPG import totaled 24,779.8kt in 2021, hitting a historical high. Meanwhile, China’s LPG import was the highest in the world, so was the demand growth.
LPG importers were concentrated in East China, backed by geographic advantage.
The Middle East, North America and Asia are major LPG producers around the world. Therein, Asian LPG resources are mainly by-products at refineries, and the demand for LPG in Asia is relatively strong. Accordingly, the overall LPG import in Asia is relatively high. The LPG resources in the Middle East and North America are associated with oil fields, so the LPG supply is ample, and the quality is better. China mainly imports LPG from the U.S. and some Middle Eastern countries via VLGC, putting forward high requirements for terminals and storages. The coastline in East China is long, and the distance from the Middle East and the U.S. to East China and South China is relatively short, so LPG importers in East China and South China enjoy transportation time and cost advantages. With the volume of LPG imported from the U.S. rising, there are more LPG deep-processing units and importers in East China.
According to SCI’s data, there are 16, 10, 3, 1 and 1 LPG importers in East China, South China, Shandong, North China and Northeast China respectively. At the same time, the total refrigerated LPG storage capacity in East China is 2.739 million m3, taking up 49.02% of China’s total and ranking first. In the future, there will probably be more importers in East China, such as Kaijin New Material, Jiangsu Yanchang Zhongran Chemical, etc. Therefore, it is estimated that the LPG import volume in East China is likely to increase.
East China LPG import volume may rise with bullish expectation.
There was seasonality in import arrivals in East China, as both demand and import cost influenced import arrivals. In general, the demand for civil-use LPG weakened in the second half of Q1, and China’s LPG import costs moved downwards. Accordingly, traders showed low interest in stocking up, weighing down the LPG import arrivals in East China.
According to SCI’s data, the monthly LPG import arrivals surpassed 1 million mt in May 2021, as Ningbo Huatai Shengfu Polymer Material started receiving imported LPG resources at the end of April 2021, driving up the overall LPG import. In September 2022, there was no newly added LPG importer, but the LPG import in East China increased to a high level, backed by the bullish expectation for downstream demand. However, most market participants may adopt cautious attitudes to the LPG import cost in October and November in the wake of relatively low international crude oil prices in September. According to SCI’s shipment data, it is predicted that the import arrivals in East China will be 924kt in October, showing a slight M-O-M decline.
There will probably be more LPG importers in East China in the future, so the LPG import volume in East China is likely to further rise. Besides the deep-processing demand improvement, importers will probably arrange some imported LPG resources for civil-use LPG markets in East China and surrounding regions. Therefore, it is estimated that prices of imported LPG, shipment and LPG port inventory in East China may influence China’s civil-use gas prices.
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