LPG Supply Surges in China Due to Stronger Imports and Rise in Domestic Production

The supply of LPG in China remained high in the wake of rising imports supported by increasing domestic production between June-July 2021. The Liquefied Petroleum Gas inventory levels in China also remained high due to high domestic production and the recent typhoons and floods and subsequent disruptions which delayed the cargo movement from the terminals to the domestic suppliers.

Liquefied Petroleum Gas imports into China were supported by the increasing exports from the United States. In this regard Dorian LPG, a US based LPG shipping company said that global seaborne supply of LPG increased by an estimated 1.5 million tons during Q2 of 2021 over Q1 of 2021.

The Chinese LPG production is on the rise due to increasing consumption as a feedstock for petrochemicals with Propane being increasingly favoured as feedstock for Ethylene over Naphtha. This had a downside effect on the prices of LPG in China during June-July which stood around USD 680 per ton in the last week of July.

Owing to the increased supply and strong demand, China’s Fujian Gulei Petrochemical (Gulei PC) which is a joint venture between Sinopec and Fujian Chemical recently completed the construction of its LPG import facility in Southeast China’s Zhangzhou.

As per ChemAnalyst, China’s LPG imports are expected to go down in August as the consumption of LPG inventories is time consuming. Another factor limiting the imports could be reselling in order to draw down stocks. Trade sources have intimated that the imports may keep rising till early August, and may stabilize later on.