Shandong LPG Price to Rise in Q2, 2019

Shandong LPG Price to Rise in Q2, 2019

With the Spring Festival holiday coming to an end, the operating rates at Shandong refineries gradually increased. But some refineries plan to take overhauls by the end of March. Therefore, SCI estimates that the overall LPG supply will decline to some extent.

In the tradition, the LPG supply in Shandong is relatively low in February, mainly due to the holiday. Moreover, the LPG supply usually reaches a high level in the second quarter of the year. Besides, the LPG supply in Shandong dropped year by year. In 2017, the total LPG output in Shandong was 4,812kt, down 111kt or 2.25% Y-O-Y. In 2018, the total LPG output in Shandong was 4,317kt, down 495kt or 10.3% Y-O-Y. On the one hand, with the development of LPG deep-processing industry, the LPG resources at some refineries were for self-use. On the other hand, the overall operating rate was relatively low, as the oil refining profits were low and some outdated capacity was eliminated.

Currently, the catalytic unit at China Overseas Energy (Shandong), the CDUs at Sinopec Qilu Company and the unit at ChemChina Changyi Petrochemical remain shut, and all units at Dongying Eastar Chemical Group will experience maintenance from end-March to mid-May. Moreover, Shandong Yongxin Energy Group plans to shut the unit down for maintenance at the end of March, and the unit at Shandong Huaxing Petrochemical Group will take overhaul from April. Accordingly, the LPG supply in Shandong may continue to be low in Q2, 2019. Furthermore, the international crude oil prices may rise, supported by the crude oil output reduction. On the whole, SCI reckons that the prices of civil-use gas and C4R2 may go up somewhat.

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