China LPG Industry Value Chain Analysis and Forecast
China’s LPG downstream industries maintained prosperous development. The overall deep-processing capacity expanded rapidly, and the growth rate of LPG downstream demand remained high. However, the overall LPG deep-processing profits were mediocre.
China’s LPG resources are mainly consumed in civil-use and chemical industries. The demand for civil-use gas gradually reaches the peak, but there are more market participants, intensifying market competition and the unpredictability of prices. Accordingly, profits at civil-use gas enterprises underperform, and civil-use gas enterprises experience severer profit loss risks. Profits at end users gradually improve. Some importers pay attention to regions lack of imported wharfs or provide storage service for chemical enterprises, as well as paying more attention to futures and spot market businesses to improve profits.
The chemical industry may also face the risk of surplus, so some downstream industries experience negative profit or profit shrinkage, such as alkylate, PDH, MA and iso-butane dehydrogenation industries.
PDH unit profits underperform in the wake of surplus capacity, and it is estimated that PDH unit profits may improve somewhat with the overall propylene industrial chain becoming diversified. In Q1, 2024, profits at PDH plants improved somewhat with propane prices declining, but the overall PDH plants still experienced theoretical negative profits of RMB 200-500/mt. Besides, profits from PO production were largely lower than RMB 500/mt. With the development of other downstream industries, it is estimated that the overall propylene downstream profit structure may change, and the overall downstream profits may go down. China’s PDH capacity still expanded rapidly, and the newly added capacity in Q1, 2024 reached 2,200kt/a. With rapid propane demand improvement and rising propylene output, it is predicted that profits from producing feedstock and downstream products may increase, and single PDH plants will probably experience negative profits.
Profits from producing MA may see minor improvements in the short term. Although China’s butane supply rises, it may be hard for the degradable plastics demand to grow exponentially. Meanwhile, China’s MA capacity expands rapidly, so it is estimated that MA producers may experience severer profit losses. Some plants with low capacity may encounter shuffle, and the future new capacity may be large-scale, with self-imported resources and downstream products, to enlarge profits. MA units at Dalian Hengli Petrochemical and Wanhua Chemical Group have been put into use in succession, and the butane resources imported by Dalian Hengli Petrochemical may arrive in April 2024.
Profits from iso-butane dehydrogenation MTBE production perform well and mainly hover at RMB 1,000/mt, attracting many market eyeballs. With more investors entering the market, the overall MTBE capacity rises, hindering the overall production profits.
It is predicted that China’s alkylate industry may experience negative profits in 2024. However, it is estimated that the overall profit loss may be limited, with the industry becoming standard, fairish demand and oil product quality improving.
2023-2024 Major Propane Downstream Deep-Processing Industry Profit
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