Dwindle Demand for LPG in the Chinese Market Affecting Prices Globally

The Chinese market has witnessed a drop in Liquified Petroleum Gas (LPG) prices in the first half of June 2023 amidst declining demand due to the current market dynamics and sluggish economic conditions. The sluggish demand from downstream industrial and commercial sectors has weakened prices amid adequate availability of LPG.

Due to abundant supplies in the Middle East and the US, decreased petrochemical demand from China, and soaring domestic inventories, Saudi Aramco has reduced the price of Propane. The propane prices have already been low among US propane exporters.

 The Chinese economy still has haven’t fully recovered post-Covid situation, which has impacted demand in the Chinese market. Traders have been focusing on selling their stocks at a lower cost as prolonged low demand has resulted in abundant stocks in the market. Moreover, the price of upstream Crude Oil has seen an overall decline with continuous fluctuations.

The US market has also witnessed a slowdown in the LPG market amid economic turbulence. The decreased demand from the Asian region, especially the Chinese market, has influenced the prices globally as it is a major importer of LPG. The upstream Crude oil prices have also led to a slump in the prices of LPG in the US market.

Europe being a major importer of LPG from the Middle East, particularly Qatar, has witnessed a slump in demand owing to the slowdown in economic conditions due to the Russia-Ukraine war and the persistent threat of recession in the country. 

As per the ChemAnalyst analysis, the prices of LPG in China are expected to rise in the third quarter of the year as market sentiments are foreseen to increase with improved economic growth of the country. Imports from the Chinese market play a crucial role in the market price as it is a major importer. The price of LPG in the European market is also anticipated to surge in the third quarter of 2023 as the inflation rate was reported to be 6.1% in May 2023 from 7.0% in April 2023, which would support the demand fundamentals in future months. A similar increase in price trend is expected for LPG in the USA as upstream Crude oil and Natural gas prices are forecasted to rise. Production cut, which is aimed at safeguarding profit margins, could potentially have an impact on the prices of Crude oil in the near future, which will ultimately impact LPG prices.