Shutdowns across China’s food and beverage sector amid the coronavirus pandemic have put pressure on domestic LPG demand and prices. Data from the national bureau of statistics (NBS) showed that revenue from domestic food and beverage sales dropped 18.9% year-on-year in May. As a result, LPG demand and commercial price were lower.
Poor performance by the commercial and industrial sectors in Chaoshan, Guangdong province weighed on LPG demand in the region, which fell 20% from a year earlier in May. Domestic LPG demand in east China was also affected by the Wenling road tanker explosion on June 13. Demand in the wholesale LPG market could decline further due to lower LPG demand for the provision of school meals during the summer holidays.
The Pearl River Delta index fell 8.4% from April to CNY2,675/ton ($378.50/ton) in May. Wholesale LPG demand was 15%-20% lower than a-year-earlier levels as businesses, including restaurants, closed amid the lockdown. Wholesale LPG prices in East China decreased by 7% from April to an average of CNY2,720-2800/ton ($385-396/ton) in May.
The recent increase in refinery runs in China also created a surge in LPG supply, which can put further pressure on prices. China’s LPG output increased 20% year-on-year to a 13-month high of 3.93 million tons in May as domestic refinery runs were 14.3% higher than a year earlier. Domestic LPG supply reached 5.87 million tons in May, 17.6% higher than May last year, NBS data showed.
