LOOKING AHEAD: Rising Asian LPG demand looks set to soak up last year's oversupply
| Date | 01 July 2017 |
| DOI | http://doi.org/10.1111/oet.12489 |
| Published date | 01 July 2017 |
LOOKING AHEAD
Rising Asian LPG demand looks set to soak up last year’s oversupply
Asia’s liqueed petroleum gas (LPG) markets are prov-
ing a magnet for suppliers as demand continues to grow
across the region. e demand growth is being driven by
a number of sectors from households to petrochemicals.
In the Indian sub-continent, automotive use is rising.
Future growth markets include power generation and
marine bunkers.
Asia is a net importer of LPG and as such is a tar-
get for countries with surplus production. e Persian
Gulf is the region’s traditional external supplier. New
gasdevelopmentsinIranhavemadeincreasingvolumes
available for export, while Iraq has recently become a
net exporter aer years of having to import LPG. e
US, which has more LPG available both from gas plants
and renery production, has emerged as an aggres-
sive seller in the region since early 2016, exporting a
record 580,000 bpd in January this year. Booming US
exportshelpedtocreateaglutinmarketseastofSuez
in the second half of 2016, causing stock levels to rise.
In the longer term, however, rising demand is likely to
return as the dominant factor in determining market
direction.
Rising demand
e two main Asian markets for LPG are China and
India.Chinahasalargepetrochemicaldemand,both
for steam crackers and propane dehydrogenation (PDH)
plants (see Box Propane Dehydrogenation). e princi-
pal feedstock for the steam crackers is naphtha. LPG is
sometimes substituted, however, when a lighter yield is
required and when the price of LPG is suciently below
that of naphtha. China has also been opening new PDH
plants, including two in the fourth quarter of 2016, with
two more scheduled for 2017.
Propane Dehydrogenation
Propane dehydrogenation (PDH) is a proc ess that
converts propane into propylene, which is a chem-
ical intermediate used to produce polypropylene
(PP).ePDHprocessalsoproduceshydrogenas
a by-product. PP is widely used to make a variety of
plastics and bres.
e traditiona l source of propylene w as petro-
chemical (steam) crackers, many of which in Asia
wererunonnaphtha,aheavyfeedstockthatpro-
duces large amounts of propylene as a co-product.
Global demand for propylene has been growing
rapidly. Many new steam crackers, however, use
ethane as a feedstock, which is lighter than naphtha
and produces a lot less propylene, leading to an
increasinglytightmarketinpropyleneandPP.
Asian and other petrochemical producers have
responded by investing in purpose-built propylene
plantsintheformofPDHunits,andmorearelikely
to be added.
ereareanumberofotherlargeindustrialusersof
LPG, including several units producing gasoline com-
ponents, such as alkylate, isomerate and methyl tertiary
butyl ether (MTBE). LPG is also used as an industrial
fuel, where its us e as a substitute for heav y fuel oil and
coal is being encouraged by new legislation on air qual-
ity. It is used in addition as a renery fuel, as well as
being processed in downstream units. Household use is
also large, at 40% of the tot al, the same proportion as
petrochemical use, leaving the remaining 20% for gen-
eral industrial use. Total demandis about 1.7 mn bpd, of
which 0.7 is imported.
Asia’s other large area of LPG use is the Indian
sub-continent. In India itself, the government is heavily
promoting the use of LPG by households instead of kero-
sine and biomass. In pursuit of this it is greatly extending
the distribution network for LPG and encouraging the
establishment of dealerships to supply the retail market
[1]. India imports about half its domesticLPG nee dsand
is increasing its import capacity in anticipation of a ris-
ing volume of imports. Most of its imports come from
the PersianGulf, but India will probablyneed to increase
the number of suppliers in the near-future: and the US
looks a likely candidate.
Pakistan’s consumption and imports are also rising
rapidly. As in India, the government is encouraging the
greater use of LPG by households. It is also strongly
Table F
US LPG Exports to Asia, 2011 and 2016
Destination 2011 2016 Difference
(th bpd)
China – 112 112
India – 2 2
Indonesia – 2 2
Japan 3 151 148
South Korea – 84 84
Singapore – 43 43
Taiwan – 3 3
Total 3 397 394
Source: US Department of Energy
© 2017 John Wiley& Sons Ltd
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