FocusChina propane imports to surge on new PDH projects

21 May 2013 04:33  [Source: ICIS news]

By Lilian Hua

propane gasSINGAPORE (ICIS)--China will need to import 11.91m tonnes/year of propane to ensure feedstock supply for its 17 new propane dehydrogenation (PDH) projects, about half of which are due to come on stream by 2015, industry sources said on Tuesday.

Eight PDH facilities with a total propylene production capacity of 5.36m tonnes/year are being built across the country, as China hopes to lessen its dependence on imports of the monomer. A tonne of propylene requires 1.18 tonnes of propane. (Please see table)

Assuming all the projects start up as scheduled, China’s propylene output will be able to cover 75% of its domestic requirement, industry sources said. But the country is expected to remain a net importer of the monomer for a long time.

Nine more PDH projects, which will be able to produce 4.74m tonnes of propylene, are being planned, industry said.

PDH plants are more efficient in yielding the targeted product – propylene – through the propane feedstock, compared with crackers that feed on naphtha or ethane. Much of the propane feedstock, however, will have to be imported as domestic production is not sufficient. China imported 1.88m tonnes of propane in end-2012, according to official data.

Proponents of the PDH projects in China are actively negotiating for overseas propane supply.

Among them, Tianjin Bohai Chemical Industry (Group), Zhangjiagang Oriental Energy, Fujian Meide Petrochemical and Shaoxing Sanyuan Petrochemical have signed long-term contracts to buy an aggregate of 1.76m tonnes of propane imports to feed their PDH units.

Given a difference in quality, domestically produced propane may not be suitable for China’s PDH projects. For high-purity propane, Chinese PDH projects owners  have a choice between the US or the  Middle East as feedstock suppliers.

US propane from shale gas is substantially cheaper than the crude-derived material from the Middle Eastern. But there are concerns that this price advantage will disappear over time, market sources said.

China is due to start up its first PDH facility in September, with Tianjin Bohai Chemical Industry’s 600,000 tonne/year plant.

The company has signed a term contract for 2014 propane supply, but details were not yet available. The term supply will partly cover the requirement of its PDH plant, but most feedstock supply next year will be procured from the spot market, industry sources said.

From 2015 onwards, Tianjin Bohai Chemical will be purchasing propane cargoes from trader Everglory Energy.

The Tianjin-based trader has a term contract with US exporter Targa for about six 44,000-tonne propane cargoes per year in 2015-2019, according to the market sources.

Zhangjiagang Oriental Energy Co (ZOUEC), which is the largest LPG importer in east China, has signed at least three term contracts to purchase US-origin propane for its PDH units.

The company inked a contract with a European trader for eight cargoes of propane supply in 2013-2014. The shipment, which will be one cargo every two months, will start from August 2013.

Another contract, which was signed with a South Korean trader, will ensure a total supply of 52 cargoes of propane for ZOUEC in 2015-2019. These cargoes will be supplied by an American company - Enterprise.

ZOUEC also signed a five-year contract with an American exporter Targa for six cargos of propane supply each year, effective from 2016.  

To better control its import costs and facilitate transport, ZOUEC has joined hands with a shipbuilder to build six large LPG vessels. The first LPG vessel, with capacity at 44,000 tonnes, is set to come on stream by the end of 2014. The remaining five vessels with the same capacity each are expected to be put into use by end 2015.

ZOUEC is planning to build two 660,000 tonne/year PDH units to produce propylene at Ningbo in Zhejiang province. The company is waiting for government approval for the project. It has not set a start-up timetable for the two units.

Fujian Meide Petrochemical has signed a five-year contract with Targa for 12 cargoes of propane supply each year starting from 2016.

Meide Petrochemical is expected to start up one of its two 660,000 tonne/year PDH units at the end of 2015. It has not set a timetable for the other unit.

“We are going to kick off the unit construction work soon, and associated jetties and LPG tanks are currently under construction,” a Meide company source said.

Fujian Meide Petrochemical is a subsidiary of China Packing Group Co, which is headquartered at Fuzhou city.

Shaoxing Sanyuan Petrochemical is on track to start up a PDH unit at Shaoxing in Zhejiang province in December 2013, a company source said.

The PDH unit is expected to produce around 450,000 tonnes/year of propylene and the propane feedstock will be imported from the United States, the company source said.

The company has already signed a contract with a European trader via SK Chemical for propane supply in late 2013 to 2015. The propane price will be based on trading levels in the US market.

Sanyuan Petrochemical, meanwhile, will receive its first refrigerated propane cargo, totalling 20,000 tonnes, in October at Zhapu jetty in Zhejiang province, according to a source from the company.

Market sources said the company is building LPG tanks at Ningbo in Zhejiang to expand its import business. 

China's PDH Projects under Construction or in Planning Stage         Unit: '000 tonnes

Company name

Location

Designed production capacity

Start-up date

Progress

Tianjin Bohai Chemical Industry (Group)

Tianjin

600

Late August 2013

Under construction

Ningbo Haiyue New Materials Co

Ningbo, Zhejiang

600

Early 2014

Under construction

Zhejiang Satellite Energy Co

Pinghu, Zhejiang

450

Early 2014

Under construction

Sanyuan Petrochemical

Shaoxing, Zhejiang

450

End 2013

Under construction

Yantai Wanhua Group

Yantai, Shandong

750

End 2014

Under construction

Zhangjiagang Yangzijiang Petrochemical

Zhangjiagang, Jiangsu

600

Early 2014

Under construction

600

2016

Planning

Haiwei Group

Hengshui, Hebei

500

2015

Under construction

500

2017

Planning

Huanghua, Hebei

500

N/A

Planning

500

N/A

Planning

Fujian Meide Petrochemical

Fuqing, Fujian

660

End 2015

Under construction

660

N/A

Planning

Shandong Haili Chemical Industry Co

Dafeng, Jiangsu

750

N/A

Construction to start in H1 2013

ZOUEC

Ningbo, Zhejiang

660

N/A

Waiting for approval

660

N/A

Waiting for approval

Changjiang Gas Chemical

Nantong, Jiangsu

650

N/A

Suspended

Total

10,090

Source: ICIS C1 Energy

($1 = €0.78)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Lilian Hua



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