China Feb LPG Import Arrivals See M-O-M Drop of 23%
According to SCI’s shipment data, China’s LPG import arrivals were about 1,985kt in February 2024, down 23% M-O-M and mainly influenced by import costs, operating rates of deep-processing units, deep-processing profits, import arbitrage, etc. The port inventory is relatively low in March, stimulating the overall market operation. Given the normal trading activity, it is estimated that the increment in import arrivals in March may be limited.
According to SCI’s shipment data, China’s LPG import arrivals were 1,985kt in February 2024, down 593kt or 23.00% M-O-M and up 162.1kt or 8.89% Y-O-Y. Influenced by the sluggish demand and the Spring Festival holiday, China’s LPG import arrivals declined notably M-O-M.
According to SCI’s alkane deep-processing unit operating rates, the monthly average operating rates of PDH and butane dehydrogenation units rose in February. Therein, the operating rate of PDH units reached 68.08% in February 2024, up 8.58 percentage points M-O-M, and the operating rate of butane dehydrogenation units increased by 1.04 percentage points M-O-M and reached 88.61%. Meanwhile, the operating rate of MA units was 70.39%, down 2.56 percentage points M-O-M, and that of light ends crackers remained at 92%. In terms of the LPG deep-processing demand, the consumption of LPG from deep-processing industry in February 2024 rose by about 60kt M-O-M, as most deep-processing plants maintained just-needed procurement, and some of them consumed inventory. Accordingly, China’s LPG import arrivals shrank.
Taking the PDH industry as an example, the PDH industry experienced a monthly average profit loss of RMB 267/mt in February 2024, up RMB 314/mt M-O-M. China’s propane import costs hovered at RMB 5,000-5,100/mt in February, so the PDH feedstock costs remained largely stable. Meanwhile, propylene prices went up, backed by supply-demand balance tightening. Although the overall PDH unit profits remained negative, they improved dramatically M-O-M. In terms of the import arbitrage, China’s average LPG import arbitrage was RMB -13/mt in February. Selling prices of imported LPG averaged RMB 5,227/mt, down RMB 29/mt or 0.55% M-O-M. Some plants were shut down in the wake of the Spring Festival holiday, so the demand for imported LPG from the industrial-use gas market weakened. Meanwhile, the overall LPG supply was ample. Accordingly, selling prices of imported LPG fluctuated downward. In February, China’s LPG import arbitrage was positive sometimes, but the overall LPG import arbitrage underperformed.
China’s LPG import costs in February 2024 remained largely stable, and most market participants adopted wait-and-see attitudes. Meanwhile, China’s LPG port inventory was curtailed notably. The overall spot market trading underperformed, notably dragging down China’s LPG import arrivals. Most importers consumed inventory, so China’s LPG port inventory saw a dramatic decline.
It is estimated that China’s LPG import arrivals in March will probably rise M-O-M. Given the relatively low port inventory, traders may intend to purchase imported resources. Moreover, it is expected that the operating rate of the PDH industry may go up, lifting the demand for imported LPG from the industrial-use gas market. Moreover, the demand for imported LPG from some ethylene producers may also improve. Given the relatively stable LPG spot market, the overall market trading may be limited. Overall, it is estimated that there may be a slight increment in China’s LPG import arrivals in March 2024.
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