China’s Demand Fuelling LPG Shipping Market

The LPG shipping market has seen a boost in demand from China during 2023. In its latest weekly report, shipbroker Banchero Costa said that “global LPG (liquified petroleum gas) trade has been steadily recovering in the past two years, following a very disappointing 2021. Total seaborne exports of LPG in 2023 increased by +3.9% year-onyear to 144.9 mln tonnes, according to vessel tracking data from Refinitiv. This was only slightly slower than the +4.4% y-o-y growth recorded in 2022, which followed a -6.0% y-o-y decline in 2021. Nevertheless, these totals mask significant differences in export volumes from different exporters, as well as in demand from the various importers.

According to the shipbroker, “in Jan-Dec 2023, LPG exports from the USA increased a very healthy +15.1% y-o-y to 60.0 mln tonnes. The USA are by far the largest exporter of LPG, accounting for 41% of global volumes in 2023. LPG exports from the GCC declined by -6.2% y-o-y in 2023, to 40.5 mln tonnes, including 15.1 mln t from the UAE, 9.9 mln t from Qatar, 7.7 mln t from Saudi Arabia, 5.1 mln t from Kuwait. Shipments from the GCC accounted for 28% of global exports. Exports from the EU also declined by -20.0% y-o-y in 2023 to 6.0 mln t”.

“In terms of imports, the top destination for LPG in 2023 was Mainland China, accounting for 22% of global imports. Imports to China increased by +24.8% y-o-y in 2023 to 31.2 mln tonnes. Imports to the EU declined by -11.2% y-o-y in 2023 to 19.2 mln t. Volumes into India declined by -1.3% y-o-y to 18.9 mln tonnes. Imports to Japan also declined by -6.9% y-o-y to 9.9 mln tonnes in the same period. Imports to South Korea in 2023 also contracted by -13.2% y-o-y to 7.8 mln tonnes. Let’s now focus on Mainland China, which is now the largest importer of LPG in the world. As already mentioned above, LPG imports into China in 2023 surged by a spectacular +24.8% y-o-y to 31.2 mln tonnes. This followed a +4.1% y-o-y increase in 2022, a +8.9% y-o-y increase in 2021, and a +4.5% y-o-y increase in 2020. Surprisingly, demand never contracted even during the worst of the Covid-19 years”, Banchero Costa said.

The shipbroker added that “top LPG discharging ports in Mainland China in 2023 were: Ningbo/Zhoushan (3.6 mln t in JanDec 2023), Yantai (3.4 mln t), Lianyungang (2.8 mln t), Dongguan (2.4 mln t), Dongjiakou (1.6 mln t), Longkou (1.4 mln t), Zhapu (1.3 mln t), Qinzhou (1.2 mln t), Zhuhai (1.2 mln t), Lianyungang (1.1 mln t), Panjin (1.1 mln t), Jiaxing (1.0 mln t). Surprisingly, given the ongoing political tensions, the major source of LNG for China are the United States. Volumes on this route has gone through the roof in recent years. Whilst LPG trade from the USA to China grounded to a halt in 2019 (it was just 0.20 mln tonnes!), in 2020 the United States emerged as the number one supplier of LPG to China with 5.3 mln tonnes. This went up to 7.3 mln t in 2021 (+39.0% y-o-y), 9.2 mln t in 2022 (+25.1% y-o-y), and 14.8 mln t in 2023 (+61.8% y-o-y). The USA accounted for 47.6% of China’s total seaborne LPG imports in 2023. Houston was the top export port for LPG to China, with 9.1 mln t loaded there for destination China in 2023. When it comes to other sources of LPG, it is primarily the Middle East which in 2023 accounted for a combined 45.9% of the LPG imported into China. Over one-third this was from the UAE, which was the source of 5.2 mln tonnes or 16.8% of the total LPG imported to China in 2023. Another 8.5% or 2.7 mln tonnes were from Qatar, 7.1% or 2.2 mln t from Iran, 5.7% or 1.8 mln tonnes from Oman, 4.8% or 1.5 mln t from Saudi Arabia”, Banchero Costa concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide