The country's economic rebound and new capacity drove the resurgence in demand last year
China's apparent demand — total domestic LPG production and net imports — reached a historical high of 71mn t in 2021, as imports and output climbed to record levels as a result of the country's expanding petrochemical demand and a strong economic rebound.
There was a dip in apparent demand of 6.5pc on the year to 5.55mn t in December owing to a decline in arrivals and domestic production. But this was not enough to prevent demand over the course of 2021 rising by more than a quarter from 63.2mn t in 2020.
LPG imports to China dropped by 7.6pc on the month to 1.87mn t in December, customs data show, as high import costs and negative margins dampened demand from petrochemical buyers. But again this blip was outweighed by strong growth in arrivals in 2021, rising by a quarter on the year to 24.5mn t — 19.1mn t of which was propane and 5.35mn t was butane.
Deliveries to China rebounded last year as around 2.85mn t/yr of propane dehydrogenation (PDH) capacity came on line, while 800,000 t/yr of demand was added from the start-up of LPG-fed ethylene crackers. Imports were also supported by the continuing rebound in economic activity from the early stages of the Covid-19 pandemic in the first half of 2020.
China's LPG re-exports dropped by 17pc on the month to 82,000t in December, while over the course of 2021 they rose by a quarter to 950,000t — putting net imports at 23.5mn t. The country's re-exports consisted of 399,000t of propane and 587,000t of butane, and the rise was driven by firmer import demand in southeast Asia as economies recovered from the early stages of the pandemic.
Domestic LPG output also dropped in December, by 6.2pc from November to 3.76mn t, as the approaching Beijing 2022 Winter Olympics resulted in refineries in Shandong province and northern China cutting run rates or suspending operations to improve air quality. But again, demand grew firmly over the year, rising by 7pc to 47.6mn t in 2021 as new refining capacity and growing fuel demand drove up operating rates, especially in east China.
Refineries in Shandong and some parts of north China will maintain low run rates during the Winter Olympics over 4-20 February, while localised outbreaks of Covid-19 are keeping the oil products demand outlook uncertain.
The US remained the largest single supplier of LPG to China in 2021, expanding its market share to 34.3pc, while the UAE and Oman were the second and third-largest exporters, supplying 16.7pc and 12.7pc, respectively.
The US, the UAE and Qatar were the three largest suppliers of LPG to China in 2020, accounting for 24.5pc, 16.6pc and 15.4pc of China's total imports that year, respectively.
