|
|
|
 |
News
View |
|
|
|
|
|
|
| |
| China's Oriental Energy unable to re-export LPG on poor margins |
|
| News Source：http://www.jinchemical.com/
; SendDate：2010-7-29 10:57:36 |
Shenzhen-listed Oriental Energy, one of eastern China's major importers
of LPG, has been unable to re-export imported LPG cargoes from its Ningbo
bonded LPG terminal as Asian LPG prices have been on a downward trend since
May, company sources said Wednesday.
"We have been looking to re-export since our Ningbo LPG terminal was
granted permission to operate as a bonded storage in May this year," said a
company source.
Asia LPG values were down in July for the third consecutive month, Platts
assessments showed.
The average CFR South China LPG value was $727.57/mt in April, and
it fell to $723.55/mt in May, $665.16/mt in June and $597.03/mt for balance
July, Platts assessments said.
That means the re-export margins would be negative if it resold cargoes
bought earlier.
"There has been no opportunity for re-export since May as the LPG price
normally drops in the summer due to weaker seasonal demand, compared with
the winter," another company source said.
"We have built a high LPG inventory in the Ningbo terminal. And we expect
international LPG prices to rebound in the fourth quarter of this year when
LPG demand recovers due to the lower temperatures," the source said.
Oriental Energy's Ningbo LPG terminal, which located in east China's
Daxie Island, has a total storage capacity of 500,000 cubic meters. The
facility is the largest LPG terminal in China, and it has two refrigerated
caves each with a capacity of 250,000 cubic meters and a dock capable of
berthing 50,000 dwt vessels.
Oriental Energy submitted an application to operate its Ningbo LPG
terminal as bonded storage in end 2009, soon after it was acquired from global
oil major BP's Chinese branch last September, the company source said.
"Our target markets for re-export are Southeast Asia, Hong Kong and
South Korea, which we used to serve from our Zhangjiagang LPG terminal
earlier," the source said.
Oriental Energy's Zhangjiagang LPG terminal, located in the bonded zone
of east China's Jiangsu province, used to re-export around 30,000-40,000
mt/year of imported LPG, the source added.
But the terminal suspended operations after its dock was damaged by a
foreign cargo ship in July 2009, Platts reported earlier.
The accident led the company to purchase BP's two LPG terminals in
Jiangsu and Ningbo -- with a total LPG storage capacity of 568,000 cubic
meters -- in the second half of last year in order to maintain its LPG
business in the region, local traders said.
Oriental Energy, which currently has only the Ningbo bonded LPG terminal
in operation in East China, with the Zhangjiagang bonded facility still shut,
plans to handle 1 million mt of LPG in 2010, the source added.
Meanwhile, other major participants in the imported LPG market in east
China -- Shanghai Golden Conti and China Gas -- expect Oriental Energy to sell
most of its imported LPG into the domestic market.
"Oriental Energy is expected to sell most of its imports to the local
market as its re-export price would not be competitive compared with that
offered by imported LPG players in southern China, if it chose to sell to
Southeast Asia and Hong Kong," said a trader with Golden Conti.
The freight rates from East China to Southeast Asia and Hong Kong are
around $1-2/mt higher than that from south China, for a 30,000-40,000 mt LPG
cargo. And the cost will be higher for smaller barge cargoes of around
1,000-4,000 mt, according to the trader.
"So it [Oriental Energy] can only make use of its large storage capacity
[in Ningbo] to store inventory, and then resell it [abroad] when prices go
up," the trader added.
South China's Zhuhai New Ocean terminal, the Zhuhai BP terminal, the
Shenzhen Sinobenny terminal, the Chaozhou Ouhua terminal and the Guangxi
Tiansheng terminal all re-export imported LPG to Southeast Asia and Hong Kong
through their bonded LPG storages.
Imported LPG kept in bonded storage is exempt from customs duty and can
be re-exported. But it can also be sold into the domestic market after customs
duty is paid.
|
|
