Surge in Russian LPG imports lowers prices in NE China

Domestic prices of LPG in northeast China in May fell to 2,800 yuan/t as Russian LPG exports to China surged in April-May. Prices declined by 9.8pc from April, and also came under pressure from lower demand as a new wave of Covid-19 infections emerged in the region at the end of April.

The drop in prices followed a decrease of 1.3pc from March to April, with domestic values falling to Yn3,110/t. Values in May declined by 10.9pc from March.

Russian LPG producers applied to ship 120,800t of LPG to China in April, with state-owned railway operator RZD permitting 78,830t. Import volumes in Inner Mongolia, where Manzhouli terminal is located, surged by 161.4pc and 403pc in April and May compared to March, according to China customs data. 
China imported 12,158t of LPG in April, with propane imports accounting for 23pc and butane 77pc. Imports in May rose to 23,400t, this time evenly split between butane and propane.

Most LPG from Russia went to the industrial sector while the rest went to residential or commercial sectors, but the ratio was always verified on an as-needed basis, a refiner in northeast China said.

The shortage in domestic coal supply could spur LPG demand in northeast China once the weather gets colder, especially in winter since LPG would substitute for coal as heating feedstock, according to a refiner in east China.