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

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 LPG 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.

LPG 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.