Chinese propane buyers return, but ample supply weighs on market

The Asian propane price remained under pressure amid long supply despite Chinese buyers returning to the market for replenishment as the eight-day Golden Week holiday ended, several Singapore-based traders told Platts, part of S&P Global Commodity Insights, Oct. 9.

Chinese Huayi Group issued a tender for feedstocks for its propane dehydrogenation plant in China's Qingzhou city, while Sanjiang Chemical and Ningbo Huatai Sheng Fu have reemerged in the market for cargoes to feed their crackers, the trading sources said.

Huayi did not respond to Platts request for comment on Oct. 9, and the other two companies were not reachable.

"The current propane prices remain high amid hefty supplies. I expect another $30/mt reduction," said a trader with a PDH plant in eastern China.

Platts assessment of CFR North Asia propane cargoes has declined 7.4% since Sept. 30 to $473.75/mt at the Asian close Oct. 9, the lowest since the $467.25/mt on April 11.

Cautious in US LPG buying ahead Trump-Xi meeting

Moreover, Chinese propane buyers are closely monitoring developments in US-China relations as both Washington and Beijing announce more trade restrictions ahead of a planned meeting later this month between US President Donald Trump and Chinese President Xi Jinping.

"US LPG has attracted a 10% additional tariff. I don't think it is the worst case, nor do I rule out the possibility of increases in the tariff," a trader at a Chinese PDH plant said and added that Chinese buyers have cut US propane procurement.

Beijing, late Oct. 9, announced sweeping new export controls on rare earth and "superhard" materials, which can be used in high-tech products, and placed controls on items related to lithium batteries, as a response to Washington's recent restriction on semiconductor exports.

As the US Trade Representative's port fees are due to be imposed on Chinese ships from Oct. 14, Chinese buyers preferred to take cargoes from other regions, especially the Middle East, unless the measures are suspended, the traders said. "Anything is possible," a Singapore-based trader said.

The upcoming USTR fee, ranging from $18 to $50 per net ton, on Chinese-built, owned, or operated ethane and LPG vessels poses significant implications for global trade flows.

Middle East gains market share

"Importers are already responding by reshuffling VLGC fleets, diversifying supply sources, and adjusting routes. This has led to a drop in China's LPG imports from the US, with Middle Eastern suppliers gaining market share," said Anmol Bhushan, an associate director at Commodity Insights, in a monthly report.

On Oct. 1, China amended a key maritime law to establish legal grounds for future countermeasures against what Beijing considers unfair treatment of Chinese ships or treaty violations by foreign governments that harm Chinese interests.

China's LPG imports rebounded by about 10% to 3.2 million mt in September, from 2.9 million mt in August, while the volume in October may retreat to 2.7 million mt, S&P Global Commodities at Sea data showed.

In August, the five major Middle Eastern suppliers -- the UAE, Oman, Qatar, Kuwait, and Saudi Arabia -- collectively supplied 1.64 million mt of LPG to China, expanding their market share to 50.7% from 44.7% a year ago, according to Chinese customs data. The US was the top supplier in August at 819,000 mt.

Amid the uncertainties, the traders said they would prefer to rely more on spot supplies in 2026 rather than term contracts, as they expected increases in supply availability in the global market next year.

"Robust production from the US, new gas products in the Middle East and export facilities expansions in Canada, coupled with the global VLGC fleet and terminal expansions, [are] set to boost propane supplies in 2026," a third LPG trader said.

In comparison, India decided to issue a term tender to buy the majority of its LPG from the US in 2026 for the first time.