China LPG imports may reach 20 mil mt in 2017 on strong petrochemical demand: Sinopec

Singapore (Platts)--21 Mar 2017 908 am EDT/1308 GMT

China's LPG imports are expected to reach around 20 million mt in 2017, supported by continuous strong demand from the petrochemical sector, a senior Sinopec official said at the 22nd China LPG Conference held by the Guangdong Oil and Gas Association in Chengdu, Sichuan province.

Senior engineer Tian Chunrong predicted that the country's LPG apparent demand will reach around 54.5 million mt this year, at the conference Friday.

And the country's LPG apparent demand -- comprising domestic production and net imports -- was 49.84 million mt in 2016, up 26% on year -- the largest growth since 2010, S&P Global Platts data show.

"LPG now has been used as feedstock at more and more petrochemical units, which is expected to further push up its demand," Tian told Platts in an interview Monday.

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And as an East China market source said Monday: "More and more petrochemical units, including propane dehydrogenation units, mixed alkane dehydrogenation, alkylation units, isomerization units and steam crackers, have been using LPG as a feedstock to crack."

LPG can be used as feedstock to produce ethylene, propylene, MTBE, alkylate and other chemicals, some of which are used as blending components for producing motor gasoline, according the market sources.

China imported 16.13 million mt of LPG in 2016, up 33.4% on the year, according to data from the General Administration of Customs.


Demand from PDH plants remains the key factor to boost China LPG imports, said Tian.

The country currently has eight PDH plants, which can consume up to 5.53 million mt/year of propane, if they run at full capacity.

These PDH plants are expected to further raise run rates in 2017. And China Flexible Packaging Group is scheduled to put its 660,000 mt/year PDH plant in Fujian province into operation this year, which will also push up China's LPG demand, Tian noted.

The increased demand from PDH plants would be mainly met by imports, because they normally use imported propane as feedstock instead of the domestic grade as the former contains less impurities.

"China's LPG imports increased by around 4 million mt last year, of which around 3 million mt import growth was propane, and most of that flowed to the eastern provinces where most PDH plants are located," Tian said.

Six of the eight PDH plants are located in eastern China with total capacity to consume 4.2 million mt/year propane, accounting for 76% of the consumption by China's PDH plants.


LPG demand from other petrochemical plants is also expected to be stronger this year, according to Tian.

"I expect an increase in demand this year for blending components to produce National Phase 5 gasoline, which has been adopted nationwide since January 1. This will help drive up the demand for butane," he added.

The MTBE, alkylate, and aromatization units normally use butane as feedstock to produce chemicals and gasoline-blending components which help lift the octane rating in gasoline, market sources said.

Further, LPG demand from mixed alkane dehydrogenation units, which use both propane and butane as feedstock to produce propylene and isobutene, is also expected to increase this year.

Qixiang Tengda Chemical's 450,000 mt/year mixed alkane dehydrogenation unit in eastern Shandong province, which was put into operation in late 2016, is expected to consume more LPG this year.


Equally, domestic refineries are expected to further raise LPG yield this year due to good demand and better margins.

Tian predicted that China's LPG yield will rise to 7% in 2017, up from 6.5% in 2016.

China produced 35.04 million mt of LPG in 2016, up 20% from 2015, the highest year-on-year production growth in the past 10 years, National Bureau of Statistics figures showed.

China's LPG yield has started picking up again since 2013 on the back of resumed demand growth, boosted by more application for LPG from the petrochemical sector, market sources said.

"Our LPG yield has been raised to around 8% now as it is more profitable, compared with gasoil," said a source with Sinopec's 8 million mt/year Anqing refinery in central China Tuesday.

And Sinopec's 13.2 million mt/year Guangzhou refinery and 18 million mt/year Maoming refinery in southern China on Monday also said that they have lifted the LPG yield by one percentage point in the past year due to better demand and profitability.

"We will adjust the yield of different products a bit based on their market demand,' a source with Sinopec Guangzhou said.

Chinese refiners have altered their output slate to lift light distillate yields and reduce that of gasoil, where demand was weakened by sluggish economic growth, Platts reported earlier.

Furthermore, domestic refineries have been processing more and more light crude, which was believed would help further boost the yield of light products, including LPG, refinery sources noted.

--Edited by Maurice Geller,

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