2023 China LPG Inventory Change Review
In 2023, the volatility in LPG inventory level at refineries in China was minimal. The overall inventory level at ports was higher than that in 2022. The inventory level change was mainly affected by import arrivals, fluctuations in international and China’s domestic LPG prices, supply and demand fundamentals, market sentiment, etc. The negative correlation between port inventory level and prices was more pronounced, especially during certain time periods and under specific circumstances. Changes in supply-demand balance are directly reflected in fluctuations in inventory at sellers, particularly in the inventory level at major ports.
In 2023, the volatility in LPG inventory level at refineries in China was weaker than that in 2022 and mainly hovered at 28.77%-39.30%. To ensure the safe production at producers, refineries often maintained LPG inventory level at a medium-to-low level. The inventory level change at refineries was mainly influenced by fluctuations in international and China’s LPG prices, supply and demand fundamentals, market sentiment, etc.
China’s LPG monthly port inventory level in 2023 was higher than that in 2022. In 2023, the average port inventory level was 51.88%, up 8.04% Y-O-Y. Usually, port inventory went up in summer and moved downward in winter, mainly influenced by a variety of factors such as the import arrivals, fluctuations in international and China’s domestic LPG prices, supply and demand fundamentals, market sentiment, etc. In 2023, China’s LPG import volume was higher than that in 2022. Therein, the import volume was relatively low in February 2023, dragging down the LPG port inventory to a low point. From May to July 2023, China’s LPG import costs kept dipping, stimulating the import enthusiasm. Some enterprises raised inventory, and China’s LPG import arrivals remained over 3,200kt for three months. However, the demand for civil-use gas was sloppy in the wake of high temperature, and operating rates of some PDH units went down. Therefore, China’s LPG port inventory moved upward and hit an annual high level at the beginning of July 2023. Entering Q4, 2023, the demand for civil-use gas gradually improved, and the demand for industrial-use gas was fairish. Therefore, China’s LPG port inventory went down.
The changes in the supply-demand balance are directly reflected in the variations of the seller’s inventory level, especially the changes in the inventory level at major ports. Additionally, changes in supply have a greater impact on the inventory level than changes in demand. It is worth mentioning that due to the relatively small LPG inventory level at China’s domestic refineries and the relatively stable supply of individual refinery, impacts of inventory level at producers on supply-demand balance are limited. It is more common to see significant inventory changes at certain producer due to variations in their supply.
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