Prospects for key alkane deep processing plants 

A preview of the ICIS China Propane and Butane Market Research and Outlook

ICIS has recently launched an unprecedented study covering China's propane and butane markets. The study offers deep insight into factors determining domestic demand with a detailed forecast up to 2017.

China has seen a surge in demand for propane and butane in 2014, despite the impact of falling liquefied petroleum gas (LPG) prices and rising competition, making these products increasingly attractive to international players. This recent development is expected to continue in the coming years due to emerging downstream needs. 

To give you a glimpse of the type of valuable information provided in the study, we have made a section available for you to view.   

Prospects for key alkane deep processing plants

Key alkane deep processing units in China are propane-fed PDH units, isobutane dehydrogenation units and isobutane oxidation to epoxypropane units that are fed on isobutane, and maleic anhydride units that process n-butane.

PDH units, which need high-quality propane as feedstock, are likely to be the biggest driving force of China’s LPG imports in the coming three to five years. In China, nearly 90% of PDH units are equipped with affiliated units to process propylene, which can largely ensure high operating rates at those PDH units.

Isobutane dehydrogenation units and isobutane oxidation to epoxypropane units, however, may face some uncertainties in the future because of the oversupply of methyl tertiary butyl ether (MTBE), which is a product of these units. Epoxypropane units are unlikely to be a choice of most LPG deep processing companies in China, though the two of such units that are under construction may be able to run at relatively high rates due to advantages in feedstock purchases and product distributions. Maleic anhydride units may face the same issue as a result of limited demand for the product.

Status Quo and Forecast of Operation and Construction of PDH Units

China’s propane imports in the first half of 2014 are below expectations because of several turnarounds at the PDH unit in Tianjin. Additionally, Tianjin Bohai Chemical Industry started to buy propane from domestic refiners in north China and Shandong after April, because domestic propane had much lower prices than those in the international market. The company resold its term propane cargoes in the overseas markets instead.

Zhejiang Satellite Petrochemical put into operation a PDH unit in late July. However, operation at the unit is still unstable. Ningbo Haiyue New Material started a PDH unit in late August and has propane production from early September. Shaoxing Sanyuan Petrochemical is conducting a test run at its PDH unit. Zhangjiagang Yangtze River Petrochemical is expected to start commissioning at a PDH unit in late 2014.

Yantai Wanhua Group may bring on stream China’s biggest PDH unit in early 2015. The company also owns the largest underground freezer in China. In late 2015 and early 2016, Fujian Meide Petrochemical and Hebei-based Haiwei Group each will likely start a PDH unit. Both units are in early stages currently.

However, commissioning dates of the above-mentioned units can be delayed because of technical issues.

On the feedstock side, Zhejiang Satellite Petrochemical and Ningbo Haiyue New Material each received a propane cargo in June. Shaoxing Sanyuan Petrochemical mainly sold its term LPG cargoes to east China-based traders. In the coming one or two years, LPG deep processing companies with PDH units may still have term LPG cargoes resold.

Analysis on Butane Deep Processing Units

Prospect for Isobutane Dehydrogenation Units

China has seen two isobutane dehydrogenation units coming on stream as of August 2014. The 80,000 tonne/year unit is owned by Panjin Heyun Industrial Group, and the 300,000 tonne/year unit is owned by Shandong Yuhuang Shengrong.

According to ICIS China data, 19 isobutane dehydrogenation units with a combined capacity of nearly 3.51m tonnes/year are being built in China. Most of the units will be located in Shandong and are expected to come on stream in late 2014 and 2015.

Isobutane dehydrogenation units process isobutane with a purity of above 95% and produce isobutene, which can be used as a feedstock for MTBE production.

Three reasons make isobutane dehydrogenation units a choice for many deep processing companies in China.

Firstly, isobutane dehydrogenation units can provide isobutene for MTBE units. MTBE producers have been facing difficulties in keeping their units running stably as a result of raffinate C4 shortage in the domestic market.

Secondly, ultraclean LPG has abundant isobutane, which can be separated easily. Currently, ultraclean LPG from aromatisation units and isomerisation units mainly contains propane, n-butane and isobutane, with the isobutane content at about 50%.

Lastly, ultraclean LPG is more widely available than raffinate C4 and are  lower in prices. Therefore, it is more economical to build isobutane dehydrogenation units for MTBE production than to purchase raffinate C4 in the market for MTBE units. According to ICIS China data, ultraclean LPG prices in Shandong averaged at yuan (CNY) 6,142/tonne in January-August, while the prices of raffinate C4 with 15% isobutane averaged at CNY6,748/tonne.

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Comprehensive analysis and forecast for China's propane and butane markets

The ICIS China Propane and Butane Market Research and Outlook is a comprehensive study on China’s propane and butane markets, which includes a three-year forecast on supply and demand, as well as deep insights into recent market developments.

Key information available in the study include: 

  • Comprehensive analysis of China's domestic and import propane and butane markets
  • Analysis of demand growth by sectors
  • Detailed three-year forecasts of supply, demand and import requirements by region and industry
  • In-depth analysis of LPG and direct competitors such as natural gas
  • Expert views on factors influencing China's future propane and butane import demand, including domestic policies and prospects of deep processing units

Hot issues covered in the report:

  • How much propane and butane will China import in 2014-2017?
  • Was the surge during early 2014 boosted by actual demand?
  • Will China's demand boost the business of international trading firms in the next three years?
  • What is the demand outlook of LPG for burning purposes and as a chemical feedstock in China?
  • What impact does consumption tax, VAT and environmental protection policies have on supply and demand?
  • What are the risks foreign companies face when entering the Chinese market?