China Gas concludes one-year term LPG imports CFR contract starting July

Singapore — China's top independent city-gas and major household LPG distributor China Gas has concluded its one-year term purchase contract discussions for LPG supply starting July 2020, a source familiar with the matter said Monday.

Under the contract, one cargo comprising 33,000 mt of propane and 11,000 mt of butane, or with the option of a 44,00 mt evenly split cargo, will be delivered each month, to Wenzhou, Nansha, Fangcheng and Taixing.

Details on price and seller were not immediately known, though the source said it was concluded at a premium to the Argus Far East Index, CFR basis.

The seller is an international trading house, the source added. The previous contract was with European trading firm Vilma, though it was not known if it was won by the same trader.

Before that, in its term contract for April 1, 2018 to March 31 2019, China Gas bought 528,000 mt of mixed refrigerated LPG cargoes at a premium in the low teens to the average of Saudi Aramco Contract Prices for propane and butane and FEI during the month of delivery, CFR basis.

China Gas was among the Chinese importers given tariff exemptions to import US LPG starting for March, April, May and June cycles based on monthly applications, as trade tensions eased. This came after an 18-month pause in Chinese imports of US LPG.

Another source with China Gas Holdings told S&P Global Platts in 2018 that the Hong Kong-listed company is expected to import around 10 million mt/year of LPG over five years, up from 2.8 million mt/year at that time, as it sought to expand into the petrochemical sector.

The first source said China Gas is now building a propane dehydrogenation plant in Taixing, on east-central Jiangsu province, with a propylene production capacity of 600,000 mt/year, which is due for completion in two years.

But the 10 million mt LPG import figure cited earlier may be too big and unlikely be the volume, the source added.