S.KOREA'S LPG UP 4.2%

PLATTS - South Korean LPG providers' sales to the domestic market in the first six month rose 4.2% on the year despite higher retail prices, driven by solid demand for petrochemical production, company officials said Thursday.

The country's major providers sold 4.48 million mt of LPG to the domestic market over January-June, compared with 4.3 million mt a year earlier, according to the companies.

Of the total sales in H1, SK Gas, the market leader and biggest LPG importer, sold 1.99 million mt, down 10.8% from 2.23 million mt a year earlier.

With the decline in sales, its market share fell to 44.4% from 47% a year earlier. SK Gas is run by SK Group that also owns the country's biggest oil refiner SK Innovation.

SK Advanced, SK Gas' joint venture with Saudi Arabia and Kuwait, started commercial production at its propane dehydrogenation plant in May 2016 at the Ulsan complex on South Korea's southeast coast, which converts propane into propylene.

The PHD plant uses 700,000 mt/year of propane as feedstock to produce 600,000 mt/year of propylene.

LPG sales of South Korea's second-largest supplier E1 Corp. jumped 26.2% on the year to 1.09 million mt over January-June.

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 also rose 4.5% year-on-year to 486,000 mt over January-June, while SK Energy's LPG sales fell 14.3% on the year to 342,000 mt.

LPG sales by third-largest refiner S-Oil Corp. climbed 14.7% on the year to 328,000 mt over January-June, while the smallest refiner Hyundai Oilbank's sales also gained 16.7% year-on-year to 154,000 mt in the cited period.

The country's other petrochemical companies sold a combined 91,000 mt for the first six months, down from 132,000 mt in the year-ago period.

The providers did not disclose their sales volumes in Q2 alone, but given its Q1 sales of 2.24 million mt, their Q2 sales were 2.24 million mt, up 7.7% from 2.08 million mt in the same quarter last year.

"The strong LPG sales in the first half were driven by solid demand for petrochemical making, such as PHD and NCC, which rose 21.4% from a year earlier," an SK Gas official said.

"LPG sales to the transportation sector fell 4.6% year-on-year in H1 due to higher retail prices and fewer LPG-powered (vehicles)," he said. "But demand for transportation is expected to rise, prompted by the government's push for shifting towards cleaner auto fuels, like LPG," he said.

Retail propane prices averaged Won 1,849/kg ($1.65/kg) in Q2, up from Won 1,847/kg in the same period last year, according to state-owned Korea National Oil Corp, or KNOC. Retail butane prices averaged Won 2,090/kg in Q2, up from Won 2,082/kg in the year-ago period.

According to KNOC, which provides data on a barrels basis, South Korea consumed 56.3 million barrels of LPG over January-June, up 6.9% from 52.66 million barrels in the same period last year.

South Korea's LPG imports increased 5.2% on the year to 39.9 million barrels for the first six months, from 37.91 million barrels a year earlier, according to KNOC.

LPG imports from the US, the biggest supplier to South Korea, edged up 0.1% on the year to 28.12 million barrels for the first six months, from 28.09 million barrels in the year-ago period.

LPG imports from the UAE quadrupled to 3.18 million barrels over January-June, from 828,000 barrels in the year ago period, while LPG imports from Kuwait more than doubled to 3.29 million barrels in H1 from 1.28 million barrels a year earlier.

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