China LPG Market Achieved Refinement Development
Price trends of LPG components were diversified, and China’s LPG supply and demand fundamentals gradually achieved refinement development.
As seen from the chart above, the output of civil-use gas, industrial-use gas, propane, butane (n-butane, iso-butane and mixed butane) increased year by year. In 2022, the propane and iso-butane output at refineries rose notably. It is estimated that the propane and iso-butane output at refineries in 2022 will probably increase by 12.69% and 36.85% Y-O-Y respectively. Moreover, China’s propane and butane import volume is likely to go up in 2022. It is predicted that China’s propane and butane import volume will be 20,081kt and 6,217.3kt in 2022, up 4.94% and 17.48% Y-O-Y respectively.
Both demand differentiation and changes in prices of different products supported China’s LPG supply and demand fundamentals to achieve refinement development. Changes in demand resulted in changes in supply and prices, and the price differentiation further resulted in supply changes.
First, refineries who arranged resources for captive-use promoted the LPG refinement development. For example, Sinopec Jinling Company newly built iso-butane unit to arrange resources for Nanjing Jinling Huntsman New Material, and Dalian Hengli Petrochemical arranged resources for its mixed alkane dehydrogenation and ethylene units. Moreover, Zibo Xintai Petrochemical newly built light ends-based propane unit to arrange resources for its PDH unit, and Zhejiang Petroleum & Chemical preprocessed its propane resources as the feedstock of its PDH unit, etc.
Second, the overall demand for industrial-use gas improved, and some refineries newly added units and arranged resources for captive-use. For example, there were many iso-butane dehydrogenation and mixed alkane dehydrogenation units in Shandong, and some refineries were matched with n-butane isomerization units or purchased feedstock gas from refineries in other regions.
Third, with diversified price trends of LPG components, refineries intended to further subdivide resources. For example, Sinopec Jingmen Company and Zhejiang Petroleum & Chemical sold iso-butane resources to the market.
In the future, more refineries will probably arrange propane and butane resources for captive-use, and the overall propane and butane demand will probably improve, as there may be many newly added PDH and MA units. In 2023, China’s newly added PDH capacity and MA capacity are likely to be 9,000kt/a and 1,660kt/a respectively. In the next five years, China’s newly added PDH capacity will probably surpass 20,000kt/a, and the newly added MA capacity may be higher than 5,000kt/a.
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