Russian LPG exports to China by rail were on course to surge last month as a result of growing consumption in the country, while demand from other importers slumps owing to Covid-19 restrictions.
Russian LPG producers applied to ship 120,800t of LPG to China at the Zabaikalsk-Manchuria border crossing in April, with state-owned railway operator RZD permitting 78,830t of this (see table). This is more than 10 times higher than in any month since rail exports to China began in earnest in August last year.
China's domestic LPG demand has started recovering as the government eases nationwide lockdowns to contain the virus' spread (see p5). But consumption in other key importers of Russian supply, such as Poland, has fallen sharply as a result of restrictions on movement.
The crash in regional and domestic LPG prices has made Russian exports to China — where prices have been supported by stronger demand — increasingly attractive, a Russian LPG producer says. But the final export figure for April is likely to be lower as producers readjusted schedules over the month, traders say. Russia shipped 46,940t to China over 4-30 April, preliminary data show — 22,980t from state-controlled Gazprom's Surgut gas processing plant, 12,880t from private-sector firm Irkutsk Oil, and 3,955t from Sibur's Tobolsk complex.
Rail exports to China became possible following the start-up of the 1.8mn t/yr Manzhouli Far East Gas LPG and propylene terminal on the border — a joint venture between Russia's Avestra and China's Harbin Railway — in May 2018. But shipments on the route only began in earnest in December 2019 as a result of a delay in securing permits to receive LPG at Manchuria rail station. Exports to the Manzhouli terminal have not exceeded 10,000t in any month since.
The huge increase in shipments in April is not expected to create logistical problems in west Siberia owing to the large number of available railcars and reduced rail traffic during the travel restrictions, market participants said.
The terminal has 10 spherical storage tanks, each capable of holding 2,000m³ (1,200t) — six for butane, and four for propane, propylene and propane-butane mix. Avestra and Harbin Railway plan to expand the terminal by 3mn t/yr by 2021-22. LPG on the route is sold on a cpt Zabaikalsk basis, using a formula referencing the ex-Daqing price or the Argus Far East Index.
| Planned Russian rail LPG exports to China in April | ||
| Product | Exporter | Volume t |
| Butane | Omsky Kautchuk | 4,400 |
| Omsky Kautchuk | 5,400* | |
| Perm refinery (Lukoil) | 5,000 | |
| Perm refinery (Lukoil) | 5,000* | |
| Gazprom | 20,000 | |
| Gazprom | 17,000* | |
| Sibur | 6,760 | |
| Sibur | 6,760* | |
| Propane | Omsky Kautchuk | 2,000 |
| Omsky Kautchuk | 1,000* | |
| Propane-butane mix | Perm refinery (Lukoil) | 10,000 |
| Gazprom | 6,000 | |
| Sibur | 9,712 | |
| Sibur | 6,760* | |
| Angarsk refinery (Rosneft) | 1,357 | |
| Irkutsk Oil | 13,000 | |
| Propylene | Angarsk refinery (Rosneft) | 600 |
| Total | 78,829 | |
| * not confirmed by RZD | ||
