MEDIA: Chinese petchem makers' plans for cheap US gas thwarted by shipping bottlenecks at Panama and Suez
The industry’s dependence on US propane has been complicated by crises in the Panama and Suez canals, increasing freight costs and limiting supply access.
China’s petrochemical industry, heavily reliant on cheap US gas for plastic production, is facing major challenges due to shipping disruptions. Significant investments in propane dehydrogenation (PDH) technology coincided with an economic slowdown, causing a plastics glut in Asia.
The industry’s dependence on US propane has been complicated by crises in the Panama and Suez canals, increasing freight costs and limiting supply access.
PDH technology, leveraging the US shale gas boom, aimed to provide a steady supply of cheap raw materials. However, disruptions have drastically reduced profit margins, with North Asian PDH plant margins falling to $55/ton from nearly $200/ton in 2023.
The Panama and Suez canals are vital for US-Asia gas shipments, but recent blockages have forced tankers to take longer routes around the Cape of Good Hope, further increasing journey times and costs.