China's LPG imports hit record high in 1Q15

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Crystal Chan

14 May 2015
 
Gas Crystal is one of the VLGCs that has delivered LPG to China. Photo: Dietmar Hasenpusch

China imported a record high 2.085 million tonnes of LPG in the first quarter of 2015, a sign that its propane dehydrogenation (PDH) plants are finally having an impact on LPG trade.

China began establishing these plants in 2013 to meet its requirement for propylene, a plastic-making ingredient.

High-grade propane imports are feedstock for the plants.

IHS Energy's Waterborne Commodity Intelligence, which tracks seaborne LPG movements, said in a recent report that while China's import volume for April has not been officially released, figures for the month could be close to 950,000 tonnes.

IHS Energy said, "When measured against April 2014 import volumes, the year-on-year increase of about 200,000 tonnes seems to indicate PDH is beginning to become a force responsible for the record import volume."

However, with freight rates on the Gulf-Asia Pacific route currently exceeding USD100/tonne, demand for June and July seems to be slowing and the PDH plants have yet to reach their full impact with three new plants still not fully operational.

FACTS Global Energy (FGE), a consultancy covering LPG trade, concurs that LPG demand from the four operating PDH plants and from China's deep processing industry is the cause of record imports.

FGE said, "The higher LPG import demand [in the] east has meant that the east has continued to need the arbitrage cargoes from the West. These cargoes have moved, although the economics in some cases have been marginal. But the buyers have been there."