Image: China Gas LPG tanks. Source: China Gas
As part of Phase 1 of the US-China trade deal, Chinese importers have started to purchase liquefied petroleum gas (LPG), a mixture of petroleum and natural gases used for heating and making petrochemicals.
Beijing has begun granting exemptions this month for nearly 700 U.S. goods, and firms like China Gas Holdings and Oriental Energy have already been granted tariff waivers for US LPG. With the waivers, US LPG is subject only to a 1% import duty, same as rival supplies from the Middle East.
“U.S. LPG provides us a diversified source of supply to keep our overall import cost low,” said Tan Yuwei, an investor relation officer with China Gas, told Reuters, adding that the firm has booked 60,000 metric tons of U.S. fuel for arrival in late April.
China may have booked an estimated five US cargoes totaling 220,000 metric tons, according to a Reuters source.
The US is not only the largest LPG exporter but also the leading producer in the world, according to data compiled by Argus Media. Prior to the US-China trade war and the 20-month hiatus, China was the second-largest buyer of US LPG, purchasing 3.6 million metric tons in 2017.
China’s resumption of purchasing LPG will help boost the industry during a time when Saudi Arabia has flooded the crude market. However, as most LPG comes from associated gas production, changes in oil and associated gas production volumes will impact LPG production levels, according to analysis in Butane-Propane News.
“We can expect modest residential/commercial LPG demand growth to continue in future years as long as the world population is growing and the global economy isn’t suffering,” said Craig Whitley, President and CEO of World Energy Consultants LLC, to the above industry outlet. “Global residential and commercial LPG demand has grown as much as 7 million [metric] tons in good years and has realized annual declines during bleak economic times.”
Source: Equities News