China’s LPG storage capacity is expected to expand again in 2025 after it continued to grow in 2024, the latest Global LPG Storage Survey finds. But whereas the expansion of the past five years has been driven by the country’s investment in propane dehydrogenation (PDH) projects, next year’s increase is supported by facilities built to serve new ethylene steam crackers.

China’s PDH capacity reached 22.6mn t/yr by the end of September, up 237pc from 6.7mn t/yr at the end of 2019. This has necessitated a significant increase in propane imports as well as domestic refrigerated LPG storage capacity for VLGC deliveries, which rose 159pc to 5.7mn t from 2.2mn t. The number of import terminals that can be served by VLGCs has grown to 41 from 23 since 2019.

China’s PDH expansion is expected to slow next year owing to sustained negative production margins. Yet the country’s LPG storage capacity is yet again on course to rise, by 330,000t to 6.1mn t, backed by projects tied to new crackers. Domestic petrochemical producers believe LPG will be more competitive than naphtha in terms of cost over the long term, and are consequently building crackers designed to use the feedstock, including ExxonMobil’s 1.6mn t/yr cracker in Huizhou, and BASF’s 1mn t/yr cracker in Zhanjiang.

Ethane imported from the US is likely to be even more competitive than LPG or naphtha, resulting in a crop of new ethane-fed cracker projects as well as conversions of existing units, supporting the development of ethane import terminals and storage capacity. Huatai Shengfu’s 600,000 t/yr cracker in Ningbo will switch one of its propane furnaces to ethane use by the end of this year, converting its VLGC terminal into an ethane dedicated one. The 320,000 b/d Shenghong Petrochemical and 800,000 b/d Zhejiang Petroleum and Chemical integrated refineries also plan to develop new ethane terminals in the medium term. China’s ethane storage capacity is forecast to rise by 320,000t to 760,000t by the end of 2025 as a result.

By: Market: LPG, 02/10/24