Asian Petrochemical firms are switching over to LPG

Petrochemical firms based is Asian region are planning to switch to liquefied petroleum gas (LPG), by retooling plants to store and building tanks, also from the US the imported LPG is being processed. Moreover costlier naphtha as a raw material that has been traditionally used by number of Asian petrochemicals firms will be replaced by the shale gas boom.

According to the industry experts, the reason behind switching to LPG is due to raise in the supplies of the U.S. that has pushed the prices lower than those of both naphtha and LPG from their major supplier the Middle East.

Over the next one to two years few major Asian petrochemical companies such LG Chem, Samsung Total Petrochemical and Royal Vopak are expanding their import terminals or retrofitting plants s they buy more of LPG and moreover to formulate a broad range of consumer and industrial plastics gas is being used by most of the petrochemical firms. However

According to the sources, at a time whilst global trade is still recuperating from the after effects of the financial crisis, buying of LPG will somehow help the United States spruce probable surplus of the gas and also give more business to shipping industries. Since June, 2014 most of the Asian petrochemical firms based in Thailand, Japan, Taiwan and South Korea have collided up their use of LPG, as the gas has charged at least USD 50 a ton less than naphtha, as per the market players.

Moreover as per the researched report, since the month of June, 2014 the usage of LPG done by the Far East is 350,000 to 400,000 mt in compare with a large amount of 250,000 to 300,000 mt a month in the past.

Furthermore, as a part of a cost-saving feedstock as a part of Shale boom a new Chinese petrochemical plant schedules to use growing exports of U.S. liquefied petroleum gas (LPG), joining other plants on east coast of China. Additionally around USD 8 billion petrochemical complex in Huizhou city by major Chinese energy giant CNOOC Group aims to use US LPG and also South Korean based major petrochemical firms will build LPG tank, wherein nearly 40,000 tons of LPG tank will be built by Samsung Total to traverse on the shale boom.

Another major South Korean based Petrochemical producer LG Chem, after the October, 2014 scheduled maintenance turnaround at its Yeosu complex, the company will raise the LPG volume used by its crackers by half to 66,000 tonnes. Likewise, a Dutch company that stores and handles various oil and natural gas related products Royal Vopak N.V. will also build an LPG storage facility to give petrochemical manufacturers a substitute to naphtha with an initial capacity of 80,000 cubic meters, as per the researched report.

Hence as per the LPG trader, due to the amount of supplies available the prices of LPG prices should be more cutthroat against naphtha.

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