China's Fujian steam cracker favours LPG in July

Market: LPG
14/07/20

China's Fujian Refining & Petrochemical (Frep) replaced some naphtha feedstock for its ethylene cracker with butane from the start of July, as LPG prices remained at steep discounts against naphtha values.

Frep's 240,000 b/d refinery is a joint venture (JV) between Chinese state-controlled energy firm Sinopec, ExxonMobil, and state-controlled Saudi Aramco. The plant is located in Quanzhou, Fujian province, and its 1mn t/yr ethylene cracker can run on both naphtha and LPG. The plant consumes 20,000-25,000 t/month of LPG, or 10pc of its total feedstock requirement.

The plant's ethylene cracker ran on naphtha in April-June, when butane and propane values were at a premium to naphtha. But a surge in naphtha prices in June as a result of strong ethylene margins and tight supplies reversed the price relationship.

LPG imports into the Quanzhou terminal were about 74,000t in the second quarter of the year, lower by 27pc on the year, according to data from oil analytic company Vortexa. Quanzhou terminal typically sells half its LPG supplies into the residential sector, with the other half consumed by Frep's ethylene cracker.

Other ethylene crackers in China with feedstock flexibility are also eyeing LPG purchases. The CNOOC-Shell JV in Guangdong province that has a 1mn t/yr ethylene cracker is considering using LPG from CNOOC's 440,000 b/d Huizhou refinery, and could consume some 20,000 t/month of LPG. Negotiations are underway. The JV is also monitoring the cracking economics of butane, but has not indicated any intention to switch.

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

13/11/24

US inflation rises in October to 2.6pc

Houston, 13 November (Argus) — US inflation ticked higher in October, led by monthly gains in shelter, a reminder that the last lap in the Federal Reserve's marathon to bring inflation to its long-term target remains a challenge. The consumer price index (CPI) accelerated to an annual 2.6pc in October, in line with analysts' forecasts in a survey by Trading Economics, from 2.4pc in September, which was the lowest since February 2021, the Labor Department reported today. Core inflation, which strips out volatile food and energy prices, rose at a 3.3pc rate, unchanged on the month. The energy index contracted by 4.9pc over the 12 months, slowing from a decline of 6.8pc through September. The gasoline index fell by 12.2pc, slowing from a 15.3pc decrease the prior month. The fuel oil index fell by 20.8pc. Federal Reserve policymakers last week cut the target rate by a quarter point, following a half-point cut in September that kicked off an easing cycle from then-23-year highs. Inflation has slowed to near the Fed's 2pc target from highs above 9pc in mid-2022 that proved to be a major impetus behind president-elect Donald Trump's victory at the ballot box on 5 November. The CME's FedWatch tool today gives near-80pc odds of another quarter-point cut in December. "The economy can develop in a way that would cause us to go faster or slower" in adjusting rates lower, Fed chair Jerome Powell told reporters last week after the Fed decision. The food index rose by an annual 2.1pc, slowing from a 2.3pc gain through September. Shelter rose by an annual 4.9pc, unchanged. Transportation services rose by 8.2pc. New vehicles fell by 1.3pc while used vehicle prices fell by 3.4pc. Services less energy services, viewed as core services, rose by 4.8pc. On a monthly basis, CPI rose by 0.2pc in October, a fourth month of such gains after falling by 0.1pc in June. Core inflation rose by 0.3pc for a third month. Shelter accelerated to a 0.4pc monthly gain, accounting for over half of the monthly all-items increase, after a 0.2pc gain. Energy was unchanged in October after falling by 1.9pc in September from the prior month. Food rose by 0.2pc on the month, following a 0.4pc gain. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more

News

Review delays Brazil's LPG assistance program

11/11/24

News

11/11/24

Review delays Brazil's LPG assistance program

Sao Paulo, 11 November (Argus) — Brazil's lower house has removed a proposed LPG assistance program from its urgent voting schedule, submitting it to further review and revisions. The program announced in August is still under deliberation, but officials now expect further revisions before it moves forward and launches on 1 January. The bill may add new controls to avoid fraud, the mines and energy ministry's petroleum, natural gas and biofuels secretary Pietro Mendes said last week during a debate in the lower house about LPG. Congressman Hugo Leal, the bill's overseer, told Argus that he will propose creating LPG cylinders smaller than the typical household 13kg models to ease access for low-income families. Low-income families spend 70pc of their resources on housing and groceries, according to Carlos Ragazzo, a researcher at the Getulio Vargas Foundation. That suggests that the current government financial support has likely been used for monthly expenses rather than substituting firewood usage for cooking with LPG. Consumption of firewood for cooking fell from 2005-2015 (see chart) , thanks to improved economic conditions throughout the country, according to energy research firm EPE. But the share of households that use firewood for cooking has hovered around 25pc since 2015, even after the launch of program to promote LPG cooking use in 2021 to help those families during the Covid-19 pandemic. Leal met with lower house leader Arthur Lira on 5 November to discuss the program's proposals and voting agenda, but no details have emerged since. Almost 1mn Brazilian households cook with biomass only. That represents 1.1pc of the 12.7mn households that use biomass for any energy need. Additionally, 56pc of the biomass-only households are low-income families. A 13kg LPG cylinder in Brazil costs R106.63 ($18.49), on average. That represents 7pc of Brazil's minimum wage. Low-income families usually receive only half of the minimum wage, on average. By Betina Moura Brazil residential energy sources Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Poland's Azoty ramps up PDH/PP operations at Police

08/11/24

News

08/11/24

Poland's Azoty ramps up PDH/PP operations at Police

Warsaw, 8 November (Argus) — Polish chemical conglomerate Grupa Azoty said it is making progress in ramping up production at its new 437,000 t/yr propane dehydrogenation (PDH) and 429,000 t/yr polypropylene (PP) complex in Police, although it needs time to stabilise output and ascertain the unit's economic feasibility. Azoty said both units are operating even though formal commissioning of the entire project has not yet been yet completed. It is in negotiations with the contractor to undertake final improvements and overcome some defects, it said. Azoty expects to agree with the contractor on final terms of commissioning by the end of this year. Since the start of its operations, the PP plant has produced more than 200,000t and sales of PP reached 60,000t in the third quarter, Azoty said. Azoty sees healthy demand for its PP products from European buyers that want to diversify their supply portfolio to reduce risk in delays to imports from Asia-Pacific. "We see end users want have at least 30pc of their (PP) supplies to come from local European supplies," said plant manager Andrzej Dawidowski. He said the company sells PP through its own distribution as well as through traders that market in Europe and elsewhere. Azoty expects to make adjustments to this model as soon as it stabilises output, which would enable buyers to determine their demand for Azoty's product. Azoty said the Police plant is yet to generate positive earnings, and it requires stable supplies of feedstock propane. It said it is working with suppliers to secure financing to ensure steady propane supplies. Azoty also said the letter of intent with Polish integrated Orlen, about a possible sale of a stake in the PDH/PP project was extended until end of 2024, giving them more time to discuss the possibility of co-operation. By Tomasz Stepien Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Gatun Lake to reach all-time high in Dec: Panama Canal

08/11/24

News

08/11/24

Gatun Lake to reach all-time high in Dec: Panama Canal

London, 8 November (Argus) — Water levels at Gatun Lake that supplies the Panama Canal will reach an all-time high in December, according to forecasts from the Panama Canal Authority (ACP). This is a significant shift from the start of the year, when water levels were at the lowest January level since 1965 following an extensive El Nino induced-drought in 2023 ( see chart ). ACP expects water levels at the lake to hit 88.9ft on 7 December and then 89ft on 18 December, which if confirmed would break the 88.85ft record registered on 5 December 2022. This time last year water levels were in an 80-82ft range, the lowest on record for the November-December months, which prompted ACP to enforce rigorous transit restrictions that sent shockwaves through LPG and other shipping markets . The change in water levels reflects the transition from El Nino to La Nina, which typically brings more rainfall to Panama. Higher water levels from the onset of the rainy season in May allowed the ACP to gradually lift transits back to full capacity by August . This has helped keep auction prices for transits at the larger Neopanamax locks near initial $100,000 bidding levels — and even outpace demand, with many slots turned away without receiving any bids . Argus ' average weekly auction prices have ranged from $112,900 to $209,389 since July, settling at $136,750 by last week. This is a complete turnaround from a year earlier, when shippers paid as high as nearly $4mn for a single transit. On average, Neopanamax auction prices cost $2.1mn in November 2023. This probably helped support Panama Canal's profits in its financial 2024 year, to $3.45bn from $3.2bn a year earlier despite a 20pc fall in transits because of water-saving restrictions implemented. The ACP said the results reflected strategies such as the "freshwater surcharge, improved water yield through structural and operational upgrades, system enhancements for reservations and auctions, and maritime service operations." Water levels are forecast to gradually decrease again from 23 December with the start of the dry season, which usually lasts by May. By Yohanna Pinheiro Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Mexican LPG market awaits direction amid reforms

05/11/24

News

05/11/24

Mexican LPG market awaits direction amid reforms

The president has committed to continuing her predecessor's statist energy policies, adding to legislative uncertainty in the country, writes Antonio Gozain Mexico City, 5 November (Argus) — Mexico's LPG market finds itself in a holding pattern, with little change in retail pricing or policy signals from new president Claudia Sheinbaum, despite energy and judicial reforms that have stirred the country's political and investment climate. Sheinbaum has not specifically addressed the LPG market beyond promising stable retail prices since being sworn into office in October following her victory in elections in June. But she has committed to continuing former president Andres Manuel Lopez Obrador's energy policies, which included increasing the domestic LPG market share of state-owned oil company Pemex to about 65pc this year from 50pc in 2020. Private-sector companies have long handled LPG retail distribution in Mexico, but they started importing LPG after the 2014 energy reform. Pemex sold 157,000 b/d (406,000t) of LPG in September, down by 1.5pc from a year earlier, the latest data from the company show. The firm imported 83,000 b/d and produced 96,800 b/d of LPG in the same month, while private-sector companies imported 106,500 b/d, according to the energy ministry. The government's commitment to state energy control is underscored by the recent passage of constitutional reforms aimed at removing Pemex and state-owned utility CFE's definition as "productive state companies", freeing them from the obligation of seeking profit. The energy reform, already approved by congress, could allow the government to provide more direct support to Pemex or guarantee larger debts, of which Pemex currently holds around $95.5bn. The continuation of Lopez Obrador's statist policies, intended to make Mexico self-sufficient in terms of gasoline and diesel production, is expected to harm market competition. Adding to the uncertainty for the LPG sector, legislators are likely to approve a bill to dissolve Mexico's independent regulators, including the competition watchdog Cofece and energy regulator the CRE, which oversees fuel and LPG market permits. This would centralise regulatory authority under the energy ministry. The CRE has been in charge of LPG retail price controls since their reintroduction in 2021 to protect residential consumers from price spikes. It is unclear if the energy ministry will set price caps if the CRE is dissolved, given concerns that it could weaken Mexico's standing in the 2026 review of the US-Mexico-Canada Agreement, as the US and Canada may see it as a threat to their interests. Another reform that has impacted Mexico's investment climate during Sheinbaum's first month is the judicial bill. Mexico will now elect more than 1,600 judges, magistrates and supreme court justices between 2025 and 2027, a process critics claim would favour candidates aligned with the executive and congress. Meanwhile, the market's long-standing issue with theft has sharply declined. Illegal taps on Pemex's LPG pipelines fell by 67pc to 698 over January-August from 2,102 a year earlier, according to a Pemex transparency response to an Argus request. The volumes of stolen LPG were not disclosed. The fall in illegal tapping was mainly driven by the government's push to secure Pemex's 1,600km Cactus-Guadalajara LPG pipeline, market participants say. Gas Welfare state The suspension of operations at state-owned LPG retailer Gas Bienestar — which translates to Gas Welfare — in November 2022 reflects some of the challenges for the government in expanding LPG access through state-run schemes. Touted as a solution to provide LPG to low-income households, sales did not expand as anticipated and the firm was "paused" until resuming operations last year. The company refused to disclose its financial statements in July following a transparency request but confirmed it operates in nine of Mexico City's 16 municipalities. This has not stopped government support, as Pemex received 300mn pesos ($15mn) for Gas Bienestar's LPG distribution units in the third quarter, according to company data. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more