North China Environmental Protection to Impact Winter LPG Demand

The winter is coming, and the LPG demand should have been in an optimistic expectation conventionally. However, in northern China, LPG market players had a dramatic mixed feeling on the upcoming heating season market, considering the foreseeable severest environmental protection on many major LPG industrial fuel downstream industries and the beneficial complement to the LNG demand gap in the coal-to-gas reform.

Air pollution preventing measures in this autumn-winter

According to the 2017–2018 Autumn-Winter Air Pollution Comprehensive Prevention and Management Regulation Plan in Beijing, Tianjin, Hebei and Surrounding Areas and other six matching plans (together short for the Plan), the 2+26 cities in North China which locate in the so-called Air Pollution Delivery Channel, including Beijing, Tianjin, Shijiazhuang, Tangshan, etc., will implement the severest environmental protection inspection in history to ensure high-pollution enterprises to avoid the winter heating season both in production and delivery fields, in order to efficiently prevent the air pollution and successfully make the blue sky sight possible again in North China’s winter.

Many major LPG industrial fuel downstream industries, including steel, coking, casting, building materials, ceramics, metal cutting, etc., are involve in the Plan, and along with the production and delivery restrictions, it is foreseeable that the industrial fuel LPG consumption will be crippled then.

Accelerating coal-to-gas reform boosting LPG demand

As an important measure of the environmental protection policy, the coal-to-gas reform obviously accelerates its progress in late 2017. However, as the major supply of the gas, natural gas faces bottlenecks and troubles in reform promotion, weighing on the reform in return. For example, the sharply surged NG demand makes the supply difficult to adapt, while the infrastructure construction is still far from accomplishment. Therefore, the promotion in coastal regions and urban regions may be smooth, but that in the non-urban regions is bogged down into a stalemate.

Considering the economical efficiency of the NG pipeline system in non-urban regions, the LPG plays an important role in the coal-to-gas reform, especially as the major alternative of the NG in those non-pipeline covering regions under the coal comprehensive prohibition. Therefore, the fuel LPG demand is expected to boom in this winter.

In conclusion, the environmental protection brings both positive and negative influences to the LPG demand in the winter heating season. The industrial use LPG demand may be restricted by the inspection, while the efforts of the fuel LPG in the coal-to-gas reform is expectable. All in all, on the whole picture, the LPG demand in this winter may be not rosy but still worthy to be anticipated.