LPG Summit: China PDH growth drives LPG demand

Houston, 19 January (Argus) — Growth in on-purpose propylene production through propane dehydrogenation (PDH) units is a major LPG demand source in China, according to Argus vice president of propylene and derivatives Paige Morse.

Propylene demand is driven primarily by polypropylene, a versatile derivative with several downstream uses. Traditionally, propylene has been a byproduct of processes meant to produce other products via steam crackers or refineries, but China propylene growth is focused on on-purpose routes.

Polypropylene demand is strongest in China and parts of southeast Asia, Morse said at the Argus Americas LPG summit in Houston today. To meet that growing demand China is increasingly producing propylene via PDH units, coal-to-olefins and methanol-to-olefins. Propylene production in China increased by 10pc from 2011-2015, and is on track to grow by another 8pc by 2020, Morse said.

China's PDH demand translates to about 170,000 b/d of LPG demand. That figure is well above US PDH consumption of around 52,000 b/d, but US steam crackers use an estimated 300,000-700,000 b/d of LPG. Globally, PDH demand amounts to about 238,000 b/d of LPG demand, while steam crackers use is between 450,000 to 1.9mn b/d of LPG.

As an emerging technology, PDH runs into some operational issues with compressor problems, for example, and can experience upsets without very pure feedstock. These issues have been exacerbated in China, where it is common to turn the units off if propylene values are deemed too low.

"But now, more and more units include derivatives, so now you're thinking all the way to the end of the chain," Morse said. "The more derivatives there are, we expect the more stable operations you'll get."

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