China LPG Import Arrivals Remained High in May 2023
According to SCI’s data, China’s LPG import arrivals totaled 2,950kt in May 2023, down 3.59% M-O-M but up 38.67% Y-O-Y. China’s LPG import arrivals remained high, mainly backed by the deep-processing capacity expansion. However, with profits from producing downstream products narrowing, it is estimated that the procurement enthusiasm at importers may weaken. Therefore, it is predicted that China’s LPG import arrivals may remain high in June but may be lower than that in April 2023.
China’s LPG import arrivals reached about 3,000kt in May.
According to SCI’s shipment data, China’s LPG import arrivals totaled 2,950kt in May 2023, down 3.59% M-O-M but up 38.67% Y-O-Y. From 2021 to 2023, China’s LPG import arrival hit the highest level of 3,060kt in April 2023. Although the import arrivals narrowed somewhat in May, it still reached a relatively high level. Supported by the deep-processing unit startup and low costs, importers still showed strong enthusiasm for operation.
The consumption from deep-processing industry rallied, but PDH unit profits saw slight shrinkage.
The consumption of imported LPG resources in the PDH industry took up the highest proportion in the total downstream deep-processing. According to SCI’s data, the operating rate of the PDH industry averaged 75.02% in May 2023, up 10.28% M-O-M, so the processing volume of propane rose somewhat. In May, the 600kt/a PDH unit at Jiangsu Yanchang Zhongran Chemical was put into use, so China’s PDH effective capacity rose. As for the consumption of imported LPG, about 1,570kt of imported LPG resources were arranged as the feedstock of deep-processing units, up 4.1% M-O-M and up 22.8% Y-O-Y. According to SCI’s data, PDH unit profits averaged RMB 32/mt in May 2023, down 91.5% M-O-M but up notably Y-O-Y. Therefore, the consumption of imported LPG resources in the deep-processing market was relatively high, lifting China’s LPG import arrivals. However, deep-processing profits narrowed somewhat in May, weighing on procurement enthusiasm of importers. Overall, China’s LPG import arrivals remained high in May but saw a slight M-O-M decline.
Importers showed relatively strong procurement enthusiasm with low costs.
Both propane CP and butane CP went down in Q2, 2023. Therein, the April propane CP and butane CP declined by $165/mt and $195/mt respectively. Moreover, the June propane CP and butane CP dropped by $105/mt and $115/mt respectively. Both May and June CP witnessed Y-O-Y declines, stimulating the import enthusiasm. In terms of the LPG port inventory, the overall port inventory in May increased M-O-M. With newly added deep-processing units at Jiangsu Yanchang Zhongran Chemical and Sinopec Hainan Refining & Chemical coming on stream, the above enterprises stocked up. Besides, some importers also stocked up at low prices to satisfy the future civil-use and deep-processing demand.
Both deep-processing unit operating rate and capacity expansion influence China’s LPG import arrivals. According to SCI’s data, China’s newly added PDH capacity may be 6,500kt/a in the rest time of 2023.
It is estimated that the PDH units at Oriental Energy (Maoming) Phase I, Jiangsu Ruiheng New Material Technology, Shandong Binhua New Material and Zhejiang Huahong New Material Phase II may be put into use soon with the total newly added PDH capacity of 2,250kt/a, notably lifting the LPG consumption in the deep-processing industry. Given the relatively optimistic expectation for industrial-use LPG demand, importers are likely to show high operation enthusiasm. Moreover, importers may intend to stock up at low prices in the wake of notable declines in China’s LPG import costs. However, the end demand is likely to see minor improvements due to the relatively high temperature. Besides, the decline in deep-processing profits may put a dampener on the import operation enthusiasm.
Overall, it is predicted that China’s LPG import arrivals may remain high in June, but market participants need to pay attention to the newly added deep-processing unit startup.
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