China looks for LPG

By Malini Hariharan

The blog has been trying to get more information on what’s driving Chinese interest in liquefied petroleum gas (LPG)-based petrochemical projects.

Plans for eight propane dehydrogenation (PDH) plants have already been announced and more could be in the pipeline as Chinese companies believe the country’s propylene deficit will expand in the coming years.

“Globally, LPG is in surplus and propane is abundantly available. There is a huge differential between propane and polypropylene (PP) prices which is driving these projects. Plus given the shortage in propylene companies believe that prices will remain firm,” explains the C1 (an ICIS service) LPG analyst at Shanghai.

But although some of the companies have already tied up with international PDH technology providers they have yet to finalise sourcing arrangements for propane.

Most of the projects are in the coastal provinces and companies will be looking to import propane. Some are trying to contact Middle East suppliers for long-term contracts.

The scenario sounds similar to coastal methanol-to-olefins (MTO) and methanol-to-propylene (MTP) projects where companies are looking at importing huge volumes of methanol.

Economics of projects based on imported propane is a big question given the poor track record of many of Asia’s PDH plants. But the blog was told a familiar story – Chinese companies are not evaluating profitability or doing a balanced analysis. What they are keen on is riding the latest wave.

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