Market analyst Ma Yan from JLC Network Technology
[Introduction] Domestic LPG commodity volume increased month-over-month in August, with some regional facilities undergoing maintenance while others resumed operations, leading to adjustments in regional supply patterns. Import traders showed high purchasing enthusiasm, with August LPG import volume expected to maintain high levels above 3 million tons, driving up total domestic LPG supply on a monthly basis. In September, strong market bullish sentiment and limited refinery maintenance will push supply levels to remain relatively high.
According to data statistics, domestic LPG commodity volume in August is estimated at 1.6798 million tons, up 1.5% month-over-month, with import volume maintaining high levels above 3 million tons.
Domestic Supply: August domestic LPG commodity volume increased slightly month-over-month, but overall fluctuations were limited. Specifically, the Ningbo Daxie Phase II facility in East China came online, while North China's Yanshan Petrochemical, Shandong Shengli Refinery, Northwest Yushenfu Chemical, and Zhongmei Mengda resumed operations after maintenance. Meanwhile, South China's Guangxi Petrochemical temporarily shut down for maintenance, along with Northeast Fushun Petrochemical, Shandong Qicheng Petrochemical, Dongming Petrochemical, Northwest Shenhua Xinjiang, and Golmud Refinery facilities. The coexistence of refinery maintenance and production resumption led to adjustments in regional supply patterns. Additionally, increased self-consumption at some refineries and low civilian gas release levels somewhat alleviated market supply pressure.
Imports: First, the easing of tariff policies created significant opportunities for US cargo to enter China, boosting traders' enthusiasm for purchasing US products. Second, August CP propane and butane prices both declined compared to July, reducing import landed costs and stimulating downstream purchasing activity. Furthermore, increased domestic deep processing demand will support LPG import growth. Overall, August import volume is expected to maintain high levels above 3 million tons.
Despite increased total supply, localized supply tightening and rising import costs have strengthened upstream enterprises' reluctance to sell and price-pushing intentions. Sellers supported prices by controlling shipment pace, benefiting from strong expectations in the international LPG market that weakened the impact of increased supply on prices. Additionally, the butane market experienced shortages in mid-to-early August due to strong chemical demand, providing positive momentum for LPG trends.
In September, LPG import cost support and "Golden September, Silver October" seasonal expectations may drive price levels gradually upward, but slow recovery in terminal combustion demand and insufficient momentum for continued growth in chemical demand suggest limited price increase magnitude. From a supply perspective, new refinery maintenance plans are scarce, while previously shut-down enterprises will gradually resume operations. Comprehensive calculations suggest September domestic LPG total commodity volume at 1.6915 million tons, with supply-side factors continuing to provide some support for market price trends.