Northern China LPG logistics hit by lockdowns, travel restrictions

Author: Lillian Ren

2021/01/14

SINGAPORE (ICIS)--LPG logistics have become challenging in northern China after a rising number of corona virus cases in Hebei, Liaoning and Heilongjiang forced a few cities into lockdowns, and led several cities to  impose travel restrictions.

Some refiners are facing pressure in sales due to the lockdowns and that is reflected by stagnant LPG prices in north China.

According to ICIS assessments, LPG prices held steady in north China, while prices have risen by yuan (CNY) 50-100/tonne in most regions on 12 January.

Huabei Petrochemical lowered etherified C4 prices by CNY80/tonne on the same day.

Transportation takes more time as vehicles have to wait for 1-3 days to complete all procedures before getting inside the refinery, according to an LPG salesperson from a local refinery in Hebei, the province reporting the highest coronavirus cases in China.

Previously, tankers can get loaded normally within one day.

“It is possible for some refineries to lower run rates to ease pressure if the situation lasts for more time,” said a refinery source in Tianjin.

A slowdown in transportation has led some LPG deep processing companies to cut operating rates due to limited access to feedstock LPG and difficulties in getting their products out.

“Our tankers can still go to Shandong, but to Beijing and Tianjin are not allowed and this affects our sales,” a source from a Hebei-based alkylation plant said.

For more tanker drivers, they are unwilling to take the risk to go to places identified with potential risks, market sources said.

Drivers get quarantined if their health code shows that they had been to places with potential risks, a northeast China-based trader said.

A Henan-based feedstock LPG buyer said they detour a city with potential risks, and many drivers do not want to take deliveries.

The impact on logistics may continue throughout January and in the coming month due to the Chinese New Year in mid-February.

As of 13 January, capital city Shijiazhuang and two other cities in Hebei and a county in Heilongjiang are shut down.

Analysis by Lillian Ren