Gas Processing & LNG is Produced by Gulf Publishing Holdings LLC



China slashes U.S. LPG imports amid trade war

SINGAPORE (Reuters) - China has choked back on imports of liquefied petroleum gas (LPG) from the United States, traders and analysts said, turning to the Middle East for extra supplies amid the two countries’ trade dispute.

China bought nearly 3.6 million tonnes of U.S. LPG in 2017, making the United States the country’s second-largest supplier of the fuel used in petrochemicals, as well as for cooking, transport and heating.

However, U.S. imports have come off dramatically over the course of 2018, before stalling completely in late August when China imposed an additional 25 percent tariff on over 300 U.S. goods, including LPG, in retaliation for U.S. tariffs.

Consultancy IHS Markit estimates U.S. imports fell to barely 1 million tonnes during the first eight months of 2018, down from about 2.1 million tonnes for the same period last year, said He Yanyu, Executive Director for Natural Gas Liquids.

The fall came as Chinese buyers wound back U.S. purchases of LPG amid uncertainty about the impact of buying product from the United States, said a trader who tracks the fuel.

No U.S. LPG cargoes have landed in China since tariffs were imposed in late August, said Ong Han Wee at consultancy FGE.

“China has stopped shipping in U.S. LPG cargoes as they are now too expensive,” added a second trader who tracks LPG cargoes.

The United States last year accounted for about 20 percent of China’s total LPG imports, which are currently running at about $1 billion a month, based on Thomson Reuters calculation.

The U.S. gap is being filled largely by Qatar, the United Arab Emirates (UAE), Saudi Arabia and Kuwait, analysts said.

The change comes as prices for the fuel, often a mix of propane and butane, spike in line with higher oil prices.

State-owned Saudi Aramco, whose contract prices are used as benchmarks in Asia, fixed its propane and butane contract prices for October at $655 a tonne, the highest since 2014.

U.S. prices are also rising. The propane price at the Texan Mont Belvieu hub hit its highest since 2014 on Sept. 28 at around 108 cents per gallon before easing to around 104 cents on Oct. 9.

This works out to about $542 a tonne, based on Reuters calculations, but is above the Saudi Aramco price after taking into account freight and terminal charges and the additional 25 percent tariff.

China’s LPG imports rose about 15 percent to nearly 18.3 million tonnes in 2017, driven partly by new petrochemicals plants which use the propane dehydrogenation method to produce the raw material for plastics..

IHS’s He said LPG prices were likely to stay firm in November and December due to higher oil prices and winter demand.

Reporting by Seng Li Peng; editing by Richard Pullin

 


Copyright © 2018. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

                                  CMEGroup                                     Icelogo

FEATURED COLUMNS

Editorial Comment
-Adrienne Blume
China is hosting the 19th International Conference and Exhibition on Liquefied Natural Gas (LNG2019) in Shanghai from 1–5 April—an appropriate choice of host country, given China’s increased appetite for natural gas.
EWAnalysis: Canada comes late to LNG; projects and prospects mixed
- Energy Web Atlas
Canada has abundant natural gas resources.
Executive Viewpoint: BHGE developing technology-driven solutions to reduce total cost of ownership
-Alberto Matucci
While BHGE recently won new orders for LNG projects, the company remains committed to differentiating the business, implementing solutions proven in LNG into other applications of the oil and gas value chain.
Industry Trends: Russia and US go head-to-head over EU gas market
-Eugene Gerden
Lower-cost Russian gas will likely continue to dominate the EU market in the coming years, despite the growth in oil prices, to which Russian gas prices are linked.


Reliable Operations & Saving OPEX for Gas Plant Refrigeration – Selecting the right technologies

Register Now

By selecting integrally geared turbocompressors for gas plant refrigeration duty coupled with a mag bearing turboexpander, operators get the added values of technology with highly reliable operations and reduced OPEX. Join Sami Tabaza and Chris Blackmer from Atlas Copco Gas and Process for a presentation followed by Q&A surrounding the turbocompressor and turboexpander technologies that can efficiently and reliably fit your gas plant design and operation to get the advantages of both technologies.

June 20, 2019 10:00 AM CDT

Register Now

 

Please read our Term and Conditions, Cookies Policy, and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.
© 2019 Gulf Publishing Holdings LLC.