In August, domestic liquefied petroleum gas prices declined once again. As of the 12th, the domestic civilian gas monthly average price stood at 4,359 yuan per ton, while the domestic post-ether C4 monthly average price reached 4,533 yuan per ton, showing further declines compared to the same period last month. China's LPG market presents a complex and volatile situation, and the approaching September will bring new opportunities and challenges.
As of August 12, the domestic civilian gas monthly average price was 4,359 yuan per ton, and the post-ether C4 monthly average price was 4,533 yuan per ton, both showing further declines compared to the same period last month. Despite overall weakness in international markets, domestic major refineries demonstrated clear intentions to support market prices, making the price decline relatively moderate.
**LPG Prices Operating Weakly**
Specifically, in the civilian gas market, the August CP price reduction combined with continued weakness in international crude oil created bearish sentiment for the domestic market. After entering August, import terminal price cuts and shipment activities further impacted the civilian gas market, while weak summer demand also intensified downward price pressure. However, some refineries intentionally supported the market due to limited supply, which to some extent slowed the market's decline.
The post-ether C4 market showed a different trend: recent consecutive declines in international crude oil negatively impacted downstream oil products and blending materials, but simultaneously, increased alkylation unit operating rates drove up demand for post-ether C4. Additionally, some refineries entered maintenance periods with increased internal allocation, creating multiple supportive factors for the post-ether C4 market.
The domestic propane market average price also showed a slight decline. On the supply side, characteristics of "local tightening coexisting with overall looseness" emerged. This was mainly due to some Shandong enterprises entering maintenance periods, while other companies actively reduced propane external sales, leading to tightened domestic resource supply. However, due to concentrated arrivals of imported resources from month-end to early month, domestic market supply was effectively supplemented, with the overall supply environment remaining relatively loose. Demand showed relatively stable performance, with downstream periodic restocking behavior and slight growth in chemical sector demand providing market support.
**Overall Domestic Supply Increased**
According to data, as of the week ending August 7, domestic liquefied petroleum gas average commercial volume was 53,845 tons per day, increasing by 29 tons per day compared to the previous period, up 0.05%. Average production was 81,048 tons per day, showing slight week-over-week growth in commercial volume. Specifically, main factors affecting this week's domestic LPG commercial volume growth included: Anqing Petrochemical in the Yangtze River region started external civilian gas sales, but previously shut alkylation enterprises in the region had all resumed normal operations, leading to corresponding decreases in post-ether C4 commercial volume; western region Mongolia facilities resumed shipments, bringing some incremental volume; South China's Maoming Petrochemical ethylene unit increased self-use gas consumption, affecting commercial volume release; Shandong region's Jingbo Petrochemical reduced external sales, and Qicheng Petrochemical units entered maintenance shutdown, further adjusting regional commercial volume patterns.
Regarding imported gas, during this monitoring cycle, domestic main port VLGC arrival volume was 719,000 tons, while both port arrival volume and storage volume declined compared to previous periods.
**LPG Downstream Demand Relatively Weak**
Current civilian gas demand is in the traditional off-season, with persistent high temperatures further suppressing residential gas demand, leading to weak consumption in this sector. Simultaneously, implementation of policies such as "cylinder-to-pipeline conversion," "gas-to-electricity conversion," and others has caused domestic civilian demand to fall below expectations, with combustion demand showing annual shrinkage trends. LPG downstream consumption heavily relies on chemical consumption.
Chemical demand also appears challenging. Specifically, in propane deep processing, although PDH unit operating rates increased somewhat, they maintained relatively stable levels overall, providing some support for propane demand. In butane deep processing, demand growth mainly relied on butane isomerization and butane dehydrogenation units driven by MTBE units, with these two types of units driving increased butane consumption.
Notably, besides alkane deep processing providing partial support for LPG downstream demand, olefin deep processing, an important component of LPG chemical consumption, performed weakly from late June through July. Among these, alkylation unit consumption decreased by 25,800 tons, isomerization units decreased by 20,800 tons, and consumption by sec-butyl acetate and butanone units also declined, with overall consumption levels significantly impacted.
**Inventory Growth Weighs on Market Performance**
Statistics as of July 29 showed LPG refinery month-end capacity utilization at 32.18%, up 1.04 percentage points from the previous month-end. For imported gas, as of July 24, domestic main port average capacity utilization reached 55.50%, up 3.71 percentage points from the previous month-end average.
Refinery inventories continued the accumulation trend since early August, with downstream restocking willingness remaining at low levels due to recent weak market conditions. Port inventories showed increased volatility recently, also facing accumulation pressure. According to customs data, China's LPG import volume in the first half of 2025 totaled 17.6681 million tons, up 1.49% year-over-year. Import increases mainly stemmed from deep processing demand, with full-year 2025 second-half imports expected to exceed first-half levels. Against the backdrop of declining fuel demand, chemical consumption has become a key factor affecting import volumes and LPG market inventory indicators, while current high LPG inventory conditions create feedback effects on the market, weighing on prices.
**Supply-Demand Relationship Stalemate May Continue**
Since June, domestic LPG supply-demand balance differences increased month-over-month, with refinery maintenance recovery and high inventory levels ensuring sufficient supply, while deep processing and terminal combustion demand declined, driving continued inventory increases. July import volumes are expected to recover, combined with increased supply and high initial inventory, pushing total supply above 10 million tons, with both period-end inventory and balance differences increasing. Short-term high inventory levels are difficult to alleviate, with period-end inventory expected to exceed 3.3 million tons long-term, though the "Golden September" peak season may slightly narrow balance differences.
Regarding international crude oil impact, August international crude oil prices are expected to rise first then fall, with volatility centers shifting downward. Trade negotiations improving macroeconomic environments support oil prices, but cooling US demand, average inventory destocking, and OPEC+ production increases competing for market share will pressure prices later, with overall ranges biased toward weak declines.
Considering all factors, throughout August, civilian gas and post-ether C4 may continue declining trends. Civilian gas faces loose supply, insufficient international support, and weak off-season demand, continuing weakness in August. Post-ether C4 summer demand boost remains limited, with new capacity releases creating pressure, prices rising first then weakening, potentially continuing to decline by month-end. In summary, civilian gas monthly average is expected at 4,380 yuan per ton, operating range 4,330-4,450 yuan per ton, with post-ether C4 at 4,530 yuan per ton, operating range 4,450-4,560 yuan per ton.
Entering September, China's LPG market, under supply-demand structural adjustments, cost-side changes, and international market influences, cannot rule out continued decline possibilities for the domestic LPG market.