Driven by robust industrial and petrochemical consumption, Chinese liquefied petroleum gas (LPG) demand will continue to grow this year by 10 percent, but well below the 24-percent demand jump last year, S&P Global Platts said in its 2017 outlook, citing market sources and analysts.
This year’s demand growth is seen as slowing due to fewer propane dehydrogenation (PDH) plant startups, according to analysts and sources.
The strong demand growth in 2016 was due to higher demand from petrochemical plants—including PDH plants—industrial users, and households.
Platts Analytics has estimated that China’s net imports jumped by 40 percent annually last year, and this year’s net import growth is seen at 22 percent. The growth in 2016 turned out to be higher than expectations from earlier last year, when forecasts were for demand growth under the 20-percent growth for 2015 and import growth of some 20 percent.
Demand from other petrochemical plants is also expected to grow in 2017, and industry sources have placed LPG demand from the petrochemical sector at some 40 percent of China’s consumption.
In addition, China’s fight against pollution and the subsequent push for cleaner fuels as alternatives to coal and fuel oil is expected to further bump up LPG demand in the industrial sector in 2017. Industrial demand is estimated to make up some 20 percent of China’s LPG consumption.
Household LPG demand – which accounts for around 40 percent of China’s total LPG consumption – is seen growing moderately this year, Platts noted, citing analysts and other sources.
In its drive to cut back on the share of coal in its energy mix and reduce smog and greenhouse gas emissions, China has recently said that it planned to cut the capacity of its coal mines by 800 million tons annually until 2020.
By Tsvetana Paraskova for Oilprice.com