Dec 2024 China Propane Market to Recover
China’s propane market was sloppy in November, as the chemical-use propane demand weakened. Entering December, it is estimated that China’s propane market may gradually recover with downstream demand improvement.
Recently, China’s propane market performed well. Especially entering December, China’s propane prices kept rising. As of December 11, China’s propane prices averaged RMB 5,178/mt, up RMB 70/mt or 1.37% from the end of November. Backed by the downstream demand improvement, China’s propane prices saw increments.
With temperature declining, the demand for fuel-use propane gradually improved. The temperature in northern China dropped notably, lifting the demand for fuel-use propane. Accordingly, the downstream procurement enthusiasm was favorable, and sales at producers performed well. Overall, China’s propane prices went up.
The demand for chemical-use propane also strengthened gradually with deep-processing unit restarts. Many PDH units took overhauls in November, so the overall PDH unit operating rate gradually declined. As of the end of November, the overall operating rate of the PDH industry reached around 65%. In December, some overhauled units were restarted. Besides, some crackers in Central China may be restarted, lifting the demand for propane. Backed by the improvement in chemical-use propane demand, sellers intended to maintain firm offers.
The relatively favorable oil product market also gave support to the propane cracking cost advantage. China’s naphtha prices kept rising from mid-November in the wake of gasoline demand improvement. Accordingly, the naphtha cracking cost advantage weakened somewhat. Although China’s propane prices inched up, China’s propane import costs declined somewhat with premium going down. Therefore, the demand for propane from the cracking industry may go up.
China’s propane output was relatively high in December. In November, China’s propane import arrivals were not high, so the overall port inventory was relatively rational. However, China’s propane prices kept dipping, so China’s propane import arbitrage went down. Entering December, importers intended to maintain firm offers, as the supply was rational, and the demand for propane improved.
Forecast: Some units may be restarted, so China’s propane output may be high. Meanwhile, China’s propane import volume is likely to rise in December. Entering late December 2024, some PDH units may be restarted, lifting the demand for chemical-use propane. Accordingly, it is estimated that China’s propane prices may hover at high levels in late December 2024.
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