South Korean LPG providers sold 6.4 million mt LPG in the domestic market over January-September, up 17.4% year on year, amid lower retail prices and stronger demand for petrochemical production, company officials said Friday.
The rise outpaced the 0.8%-increase seen for full-year 2015 sales, when the suppliers sold 7.52 million mt, up from 7.46 million mt in 2014.
Of the total 6.4 million mt LPG sold over the first nine months, SK Gas, the market leader, sold 2.83 million mt, up 49.7% from 1.89 million mt a year earlier.
Its market share also increased to 44.3% for the period, up from 34.6% in the same period last year.
In May, SK Gas started commercial production at its propane dehydrogenation plant that converts LPG into propylene.
The PHD plant uses 700,000 mt/year of propane as feedstock to produce 600,000 mt/year of propylene.
SK Gas is run by SK Group that also owns the country’s biggest oil refiner SK Innovation.
Sales of second-largest supplier E1 Corp. rose 14.1% year on year to 1.54 million mt over January-September, up from 1.35 million mt in the year-ago period.
E1 Corp. and SK Gas provide LPG to the domestic market through imports, while the country’s four oil refiners produce domestically.
LPG sales by South Korea’s second-largest refiner GS Caltex fell 8.5% year on year to 741,000 mt over January-September, from 810,000 mt a year earlier.
Top refiner SK Innovation’s LPG sales also dipped 10.1% year on year to 569,000 mt for the first nine months, from 633,000 mt in the same period last year.
Third-largest refiner S-Oil Corp. sold 445,000 mt of LPG over January-September, up 3.7% from 429,000 mt, while smallest refiner Hyundai Oilbank’s sales dropped 20.3% to 177,000 mt, from 222,000 mt a year earlier.
“LPG demand for petrochemical making soared 90% over the first nine months from a year earlier, while demand from industry use jumped 31% year on year in the period, driven by lower domestic prices,” an SK Gas official said.
But LPG demand for transport has been on the decline over the past few years, falling 4%-7% year on year over January-September due to fewer LPG-powered vehicles while consumption by households and commerce edged down 0.7% from a year earlier, the official said.
RETAIL PRICES FALL IN Q3
Retail propane prices averaged Won 1,651 ($1.39)/kg in the third quarter of 2016, down 8.3% from Won 1,801/kg a year earlier, according to state-owned Korea National Oil Corp.
Retail butane prices also fell 8.1% to average Won 1,863/kg in the third quarter, down from Won 2,028/kg in the year-ago period.
According to KNOC, which provides data on barrels basis, South Korea consumed 28.83 million barrels of LPG over July-September, up 22.2% from 23.59 million barrels in the same period last year.
The third-quarter growth slowed compared with a 29.4% rise seen the second quarter when the country consumed 20.11 million barrels of LPG, KNOC said.
For the first nine months, LPG consumption increased 21.8% year on year to 79.21 million barrels, KNOC said.
“LPG demand is likely to keep rising later this year unless retail prices rebound,” the SK Gas official said. To meet strong domestic demand, South Korea’s LPG imports jumped 34.1% year on year to 59.18 million barrels over January-September, compared with 44.14 million barrels a year earlier, according to KNOC.
LPG imports from the US, the biggest supplier, soared nearly three times to 27.83 million barrels for the first nine months, from 9.68 million barrels in the year-ago period.
South Korea’s LPG demand was sluggish in previous years. The country consumed 89.87 million barrels of LPG last year, unchanged from 89.58 million barrels in 2014, which was down 3.7% from 93.06 million barrels in 2013.
Amid weak demand, South Korea’s LPG imports fell 2.3% year on year to 62.71 million barrels last year, compared with 63.53 million barrels in 2014, according to KNOC.
-Charles Lee