OREANDA-NEWS.  February 18, 2014. Two petrochemical companies building propane dehydrogenation (PDH) plants in China have recently concluded purchase contracts with several trading and oil companies, taking a mixture of Middle Eastern and US propane cargoes, as per sources in Platts.

With this, a total of six petrochemical firms have sealed propane import deals to feed their PDH projects, as more petrochemical producers complete their new plants this year after state-owned Tianjin Bohai Chemical Industry Group started the first facility in October.

Zhejiang Satellite Petrochemical Co. was heard to have signed deals with three trading firms: Japan's Astomos, Sojitz and possibly South Korea's E1 Corp., traders said. Each trader will supply three 22,000 mt parcels over 2014 for a total volume of 198,000, though this could not be immediately confirmed. The cargoes comprise a combination of propane from the Middle East, priced off the Saudi Contract Price, and from the US, priced off the Mont Belvieu marker, sources said. Another firm, Ningbo Haiyue New Materials, was heard to have signed deals with South Korea's SK Gas and a major oil company, traders said. SK will supply two 44,000 mt cargoes this year, which will be delivered starting from the second quarter, traders said, though others said it could be three cargoes.

Ningbo Haiyue is building a PDH plant in Ningbo, Zhejiang province, with annual propane demand of 720,000 mt that is set for completion in the second quarter of this year to meet rising demand for polypropylene and other chemicals. The facility is designed to produce 600,000 tpa of propylene, which sources said would largely be sold to domestic users. Satellite Energy is building a PDH plant in Pinghu, Zhejiang, in two phases, with an annual propane demand of 540,000 mt and 900,000 mt. The first phase is due later this year and the second by 2015. The first phase of the facility can produce up to 450,000 mt of propylene and the second is expected to produce about 750,000 mt, according to industry sources.

Shaoxing Sanyuan is expected to start its plant in Zhejiang province around April, market sources said. It will use 540,000 mt/year of propane and will be able to produce 450,000 mt/year of propylene. The six companies are among nine firms building 11 PDH plants in eastern and southern China by 2015, which are projected to require 8.04 million mt/year of propane. Four more PDH plants are planned to be built after 2015 and one likely in 2017.