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Released May 15, 2018 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--China has proposed a 25% tariff on propane imported from the U.S. in response to new U.S. import tariffs on a number of Chinese products. How would this affect the U.S. industry and projects involving propane?
U.S. exports of propane have escalated rapidly since the shale gas revolution began. According to Shane Mullins, Industrial Info's vice president of product development, China imported about 123,000 barrels per day of propane last year, or about 14% of the total exports. Mullins said, "China's primary propane importers, large chemical companies that developed new propane dehydrogenation (PDH) plants, signed long-term binding contracts that include substantial fees for breaking an agreement. If the tariffs were to be implemented, several months from now all you would see is China swap its U.S. contracted cargoes with Middle East barrels destined for Japan and South Korea. In the short term, some Gulf Coast terminals leveraged to China may have to discount fees to move barrels; however, growing demand for propane across Asia would make any impacts on U.S. Gulf Coast terminals temporary."
Click on the image at right for a chart from the U.S. Energy Information Administration showing growing U.S. propane exports.
Petrochemical market information provides ICIS (London, England), quoting Braskem (NYSE:BAK) (Sao Paulo, Brazil), suggested that the tariff could temporarily increase propane supplies in the U.S.-- bad for potential exporters, good for those who manufacture downstream products from propane. Higher supplies of propane could lower prices and improve margins for U.S. PDH plants, which convert propane into propylene, the main feedstock for polypropylene.
Among the major U.S. propane-related projects being tracked by Industrial Info is the proposed construction of a PDH plant and polypropylene production facility by LyondellBasell Industries NV (NYSE:LYB) (Houston) on the Texas Gulf Coast. Construction on the 1.6 billion-pound-per-year PDH plant and 1.1 billion-pound-per-year polypropylene plant could begin in summer 2019 for completion in 2023. The projects have a combined total investment value (TIV) of $2.35 billion. For more information, see Industrial Info's project reports on the PDH plant and polypropylene plant.
Energy Transfer Partners LP (NYSE:ETP) (Dallas, Texas) is evaluating construction of a PDH unit addition at its natural gas liquids complex in Marcus Hook, Pennsylvania. Construction on the $800 million project could begin in 2019 for completion in 2021. For more information, see Industrial Info's project report.
China's proposed tariffs do not include polypropylene, which could benefit producers of this downstream product. Petrochemical company Braskem is underway with construction of a polypropylene unit in La Porte, Texas. The unit will have a production capacity of 992 million pounds per year. Construction on the project began in the fourth quarter of last year and is expected to be completed in the first half of 2020. Linde Engineering North America Incorporated (Houston) is performing engineering, procurement and construction on the project, which has an estimated TIV of $675 million. For more information, see Industrial Info's project report.
Its unclear how the proposed tariff could affect a project with clear sights on the Asian propane market: Pembina Pipeline Corporation (NYSE:PBA) (Calgary, Alberta) is evaluating plans for a grassroot propane export terminal in Kennewick, Washington. The facility would accommodate 37,500 BBL/d of propane shipped by rail from Pembina's Redwater fractionation and storage complex northeast of Edmonton, Alberta, where it would be unloaded, chilled and stored before being loaded on propane ships for export to global markets. The project has an estimated TIV of $500 million. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
U.S. exports of propane have escalated rapidly since the shale gas revolution began. According to Shane Mullins, Industrial Info's vice president of product development, China imported about 123,000 barrels per day of propane last year, or about 14% of the total exports. Mullins said, "China's primary propane importers, large chemical companies that developed new propane dehydrogenation (PDH) plants, signed long-term binding contracts that include substantial fees for breaking an agreement. If the tariffs were to be implemented, several months from now all you would see is China swap its U.S. contracted cargoes with Middle East barrels destined for Japan and South Korea. In the short term, some Gulf Coast terminals leveraged to China may have to discount fees to move barrels; however, growing demand for propane across Asia would make any impacts on U.S. Gulf Coast terminals temporary."
Click on the image at right for a chart from the U.S. Energy Information Administration showing growing U.S. propane exports.Petrochemical market information provides ICIS (London, England), quoting Braskem (NYSE:BAK) (Sao Paulo, Brazil), suggested that the tariff could temporarily increase propane supplies in the U.S.-- bad for potential exporters, good for those who manufacture downstream products from propane. Higher supplies of propane could lower prices and improve margins for U.S. PDH plants, which convert propane into propylene, the main feedstock for polypropylene.
Among the major U.S. propane-related projects being tracked by Industrial Info is the proposed construction of a PDH plant and polypropylene production facility by LyondellBasell Industries NV (NYSE:LYB) (Houston) on the Texas Gulf Coast. Construction on the 1.6 billion-pound-per-year PDH plant and 1.1 billion-pound-per-year polypropylene plant could begin in summer 2019 for completion in 2023. The projects have a combined total investment value (TIV) of $2.35 billion. For more information, see Industrial Info's project reports on the PDH plant and polypropylene plant.
Energy Transfer Partners LP (NYSE:ETP) (Dallas, Texas) is evaluating construction of a PDH unit addition at its natural gas liquids complex in Marcus Hook, Pennsylvania. Construction on the $800 million project could begin in 2019 for completion in 2021. For more information, see Industrial Info's project report.
China's proposed tariffs do not include polypropylene, which could benefit producers of this downstream product. Petrochemical company Braskem is underway with construction of a polypropylene unit in La Porte, Texas. The unit will have a production capacity of 992 million pounds per year. Construction on the project began in the fourth quarter of last year and is expected to be completed in the first half of 2020. Linde Engineering North America Incorporated (Houston) is performing engineering, procurement and construction on the project, which has an estimated TIV of $675 million. For more information, see Industrial Info's project report.
Its unclear how the proposed tariff could affect a project with clear sights on the Asian propane market: Pembina Pipeline Corporation (NYSE:PBA) (Calgary, Alberta) is evaluating plans for a grassroot propane export terminal in Kennewick, Washington. The facility would accommodate 37,500 BBL/d of propane shipped by rail from Pembina's Redwater fractionation and storage complex northeast of Edmonton, Alberta, where it would be unloaded, chilled and stored before being loaded on propane ships for export to global markets. The project has an estimated TIV of $500 million. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
