China Propane Market to Be Range-Bound
China’s propane prices went up in July 2024, backed by tight supply and favorable industrial-use demand. However, the relatively high prices slightly hindered the demand for propane. Entering August 2024, China’s propane prices hovered at highs, and the overall price fluctuations were limited. On one hand, the relatively high CP and tight supply gave support to the propane market. On the other hand, the relatively high prices put a dampener on downstream demand. Besides, PDH unit profits underperformed, weighing on the overall propane market.
The August propane CP inched up, giving support to China’s domestic propane market. With propane import costs rising, importers intended to maintain firm offers, lifting China’s domestic propane prices. Besides, the CP increments also gave support to the market sentiment, exerting bullish impacts on China’s domestic propane prices.
Moreover, sellers intended to maintain high selling prices with supply tightening. Entering August, some enterprises raised propane production, but some enterprises experienced unit overhauls and operating rate cut. Accordingly, China’s overall propane supply remained low. As of August 13, 2024, the propane daily average output reached 12,637kt, down 0.40% from the average level in July. As for the import, the overall LPG import arrivals in August were not high, and the overall import costs rose. Accordingly, importers intended to maintain firm offers.
The demand for LPG weakened, weighing on propane market. Given the traditional consumption slack season, most market participants adopted cautious attitudes to the market. Moreover, there was no notable decline in propane prices, hindering the downstream demand. Some PDH units took overhauls in August, and the overall unit operating rate declined below 70%. Accordingly, the demand for industrial-use propane weakened gradually. Besides, the PDH unit at China Zhenhua Oil was put into use, slightly supporting the propane market. However, PDH unit profits still underperformed.
On one hand, sellers intended to maintain firm offers. On the other hand, downstream users showed resistance to high-priced resources. Influenced by bullish and bearish factors, China’s propane prices saw limited fluctuations.
In the short term, it is estimated that China’s propane prices may fluctuate within a narrow range. Although the international crude oil prices rose notably, China’s propane market remained mediocre with sluggish demand. Moreover, declines in propylene prices also weighed down propane prices. Meanwhile, China’s propane import costs remained high, and the overall supply was relatively low.
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