Chinese local governments are urging households to ditch LPG and use piped natural gas instead. For instance, the city of Shenzhen in Guangdong province requires residential buildings to include the installation of natural gas pipes. Communities have easier access to natural gas pipelines and some of them ban LPG cylinder deliveries, traders said. This transition poses an additional challenge to the LPG industry amid the coronavirus pandemic.
About 132,000 households in Shenzhen switched from LPG to natural gas during the first half of 2020. At the same time, LPG wholesale volumes in the Pearl River Delta area slumped 32.7%. According to eastern and southern Chinese LPG importers, their sales revenue fell 20% year-on-year in the January-August period of 2020. Total LPG import volumes at Chinagas, Siamgas, New Ocean, Sinobenny, and Jovo terminals dropped 14% year-on-year to 2.23 million tons over the same period. Sinobenny saw volumes plummet 42% to 210,000 tons, due to the switch to natural gas.
In east China, households and restaurants are switching to natural gas on safety concerns after an explosion of a road tanker carrying LPG in June. LPG consumption in south China, where the fuel is mainly used by the industrial sector, slumped amid a slowdown in international trade. A trader estimated that industrial LPG use in the region in the first eight months of 2020 was only 30%-40% of the year-ago levels.
