Geopolitical tensions in the Middle East remain deadlocked, impacting regional oil and gas production and ocean shipping to varying degrees. Coupled with operational failures at major overseas facilities, international LPG supplies have tightened, causing import costs to surge. Conversely, the domestic market is in the traditional off-season for gas consumption; residential demand is weak, and downstream chemical sectors face poor profitability and cautious purchasing. Although increased import arrivals have eased overall supply, the tug-of-war between cost support and weakening domestic demand resulted in domestic LPG spot prices fluctuating at high levels on June 11.
I. Domestic Regional Spot Prices on June 11
As of June 11, the SunSirs LPG benchmark price stood at 5,925.00 RMB/ton, marking a slight intraday rise of 0.42% and a cumulative increase of 3.49% from the 5,725.00 RMB/ton recorded at the beginning of the month; current prices sit in the mid-to-high range for the year. Regional price disparities are evident: North China and Shandong—areas with high refinery concentrations—represent low-price zones, with mainstream ex-factory quotes for residential LPG at 6,060 RMB/ton and post-ether C4 at 5,850 RMB/ton; supplies are ample, leaving limited room for price negotiation. In East China, transaction prices are higher, with mainstream residential gas prices at 6,284 RMB/ton. South China saw even higher quotes due to the influence of imported supplies and logistics, with mainstream residential gas transactions at 6,790 RMB/ton. Inland markets, such as the Northwest and Northeast, rely on local refinery supplies, keeping prices relatively stable. The overall market is characterized by sporadic transactions driven by essential demand; intermediaries show little willingness to stockpile on a large scale, and the pace of regional supply circulation remains steady.
II. International Situation, Import Prices, and Overseas Supply Status
The international market is being disrupted by multiple factors, resulting in generally tight supplies and high price levels in overseas markets. As a core global LPG production hub, the Middle East has faced supply constraints due to geopolitical conflicts disrupting production facilities and heightened shipping risks in the Strait of Hormuz; these issues, compounded by technical failures at NGL plants in Saudi Arabia and elsewhere, have led to a significant reduction in monthly regional supply. Meanwhile, shutdowns at major Australian production projects have further tightened the availability of tradable supplies in the Asia-Pacific region.
Import costs remain under significant upward pressure. In June, the Saudi CP (Contract Price) was quoted at $760/tonne for propane (up 26.67% year-on-year) and $820/tonne for butane (up 43.86% year-on-year). Rising landed import costs have provided strong fundamental support for the domestic market. During the first ten days of June, the composite landed import price index for liquefied propane and butane remained sharply higher year-on-year, despite a slight short-term month-on-month decline. While there is no widespread global shortage, production disruptions in the Middle East and Australia, combined with shipping bottlenecks, have caused irregular arrival schedules for long-haul cargoes, leading to volatility in international LPG prices in response to geopolitical news.
III. Domestic Production, Port Inventories, and Long-Term Supply Capacity
On the supply side, domestic production is steadily rising, and local refinery units are operating smoothly; weekly LPG output increased slightly by 0.54% month-on-month, ensuring stable domestic supply capabilities for the long term. Regarding imports, a concentration of overseas cargoes has recently arrived at ports—with weekly arrivals reaching 510,000 tonnes—significantly boosting overall domestic supply.
Inventory levels show structural shifts: stocks at major national ports have accumulated, reaching a relatively high level for the current period and exerting downward pressure on spot prices, whereas refinery inventories have seen a slight drawdown, indicating limited inventory pressure. Overall, with ample domestic production capacity and continuous import inflows, the market is well-supplied with no risk of long-term shortages; high port inventories remain a key factor constraining price increases.
IV. Domestic Demand and Upstream-Downstream Linkage Analysis
The domestic market is currently in the traditional summer off-season for gas consumption. Overall demand for residential fuel is sluggish, as heating requirements for households, industry, and commerce have completely ceased, leading to a sharp contraction in residential gas consumption. In the chemical sector—a key downstream market for LPG—propane dehydrogenation (PDH) units are operating at limited capacity due to high feedstock costs and inverted profit margins; consequently, enterprises lack the incentive to ramp up production, keeping LPG feedstock procurement volumes low and leaving the market supported only by limited essential demand. Other deep-processing sectors are similarly constrained by sluggish end-user consumption, leading to a cautious approach toward procurement.
There is a clear price linkage between upstream and downstream segments: high international crude oil and overseas LPG prices continue to drive up domestic production costs, establishing a firm price floor. Conversely, adjustments to downstream chemical product and residential gas prices lag behind, making it difficult to fully pass on the cost pressures of rising feedstocks; as a result, profits are concentrated upstream, while the limited absorption capacity of mid- and downstream sectors acts as a counter-constraint, capping the potential for LPG price increases.
V. Import and Export Data (April): Year-on-Year Overview
Domestic LPG imports rose year-on-year in April, with low-priced overseas long-term contract cargoes arriving on schedule to meet daily domestic consumption needs. However, driven by rising international spot prices, the average import price surged significantly compared to the previous year, highlighting the pressure of high import costs. Regarding exports, domestic LPG is primarily consumed locally, keeping export volumes low with only small quantities flowing to neighboring countries; the trade pattern remains characterized by "high imports and low exports." The focus of overseas procurement has gradually shifted toward regions with more stable supplies, and the overall pace of foreign trade has remained steady without drastic fluctuations.
VI. Market Outlook
LPG prices are expected to continue fluctuating within a high range. On one hand, geopolitical tensions in the Middle East and overseas plant outages are unlikely to be fully resolved in the short term, keeping import costs high and providing solid support for the price floor. On the other hand, weak demand during the domestic off-season, high port inventories, and increased local supply continue to suppress the extent of price increases; the tug-of-war between bullish and bearish market forces will intensify, keeping price fluctuations within a relatively fixed range.
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