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US butane exports up 23.2% in 2017; China becomes top importer
HOUSTON, April 2, 2018 (PCW) -- US butane exports rose 25,500 b/d on average in 2017, an increase of nearly 23.1% to 135,417 b/d in 2017 compared to 2016 levels, EIA data showed. Butane exports hit an all-time high of 180,000 b/d in Mar. The spike corresponded with some production outages in the Mediterranean, which required several exporters to pull supplies from the US instead.
China became the leading importer of US butane in 2017, surpassing Korea, which had in prior years been in the top spot. Korea is the world’s largest producer of butane canisters and cartridges. China’s uptick has come on the back of increased LPG cracking as several existing olefins plants in the country retrofitted their facilities to allow for more LPG in their feed slates.
Additionally, early in 2017, China’s National Phase 5 gasoline standard went into effect, which mandates emission reductions through a sulfur content cap. As such, the higher-octane rating in the gasoline that can only be used to meet the new national standards requires greater demand for butanes as a feedstock in alkylate and aromatics units. China – which was already net short butane prior to the new standard – has seen its short position exacerbated in a relatively short period of time.
The top five importers in 2017 were: China at 23,956 b/d (up 1,484 b/d or 9.2%); Korea at 18,499 b/d (up 742 b/d or 3%); Japan at 14,113 b/d (up 3,756 b/d or 99%); Canada at 11,915 b/d (down 887 b/d or 6.6%) and Morocco at 10,260 b/d (up 1,219 b/d or 14.5%). On the rise are exports to Egypt, Turkey and Indonesia, which have been peripheral importers at best in prior years.
These countries’ imports are up two- to fivefold over 2016 levels, reflecting a shift away from Middle East supplies (which are expected to fall on OPEC production cuts). From a price perspective, US butane is coming in at a viable discount to current Saudi contract prices making exports feasible as well Going forward, Asia looks set to remain the leading destination for US butane with its total volumes more than those from North America, Latin America, Europe and Africa combined. China’s robust exports should continue, unless a tariff war with the US expands and intensifies. -- Samantha Hartke