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Strategic Report - China Propane Dehydrogenation: Global Disruption on the Horizon?

A large wave of Propane Dehydrogenation (PDH) units are coming to China. One PDH plant is already in operation with many others under construction or in an advanced phase of planning.

Propylene from PDH will grow from a current negligible amount to a significant part of the local supply source within the next five years. At the same time, many PDH projects are also planned outside of China.

The on-purpose production of propylene is largely planned to reduce China’s dependence on imports of propylene derivatives, and growing dependence on imports of crude oil which is the main feedstock for producing propylene domestically. PDH is one of the options to reduce dependence on imported oil. More importantly, it is a viable choice for medium and small propylene users to produce their own propylene. A majority of companies planning to build PDH units will integrate the propylene capacity with downstream propylene derivative capacities.

In contrast to the US and Middle East, which have easy access to abundant propane supply, China has historically been a net propane importer and will remain so going forward. All China PDH projects will have to rely on imported propane from North America and the Middle East.

The large surge of PDH capacity in the near future will have a far-reaching impact on global propane, propylene and propylene derivative supply and demand dynamics.

  • Are all the announced projects going to happen?
  • What is driving China’s PDH development?
  • Where will all the propane come from?
  • Will it create any global propane supply tightness?
  • Is China PDH competitive?
  • What are the hurdles and limits for PDH in China?

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