China demand growth to fuel LPG import rise

China's soaring demand for liquefied petroleum gas (LPG) is set to lift imports from 3.6 million tonnes in 1995 to 5.5 million tonnes by 2000, according to a report.

The report, prepared by British-based Ocean Shipping Consultants, says mainland demand would reach about 10 million tonnes a year by 2010.

It forecasts a recovery in the LPG carrier market in the medium term and a large expansion in the liquefied natural gas (LNG) shipping sector.

The report says the overall outlook for the LPG sector remains positive, with seaborne trade volumes expected to rise by more than 50 per cent by 2010, to top 69 million tonnes, against just under 45 million tonnes in 1995.

Demand growth over the forecast period - from 1995-2010 - will be centred on developments in southern and eastern Asia, with LPG import growth focused on China and India.

Japan is set to remain the single largest importer of LPG and is forecast to account for just under 26 per cent of world trade in 2010.

The report says a gross annual fleet expansion rate of 2.7 per cent will be sufficient to maintain existing productivity rates.

'In the medium term, stronger demand infers an increased rate of 3.4 per cent per annum between 2000 and 2005,' the report says.

Comparing the order book and the need to replace ageing fleet, the report forecasts a fleet deficit of just over 2.3 million cubic metres between 1995 and 2000.

On the LNG front, world trade is set to expand from 92.5 billion cubic metres in 1995 to 122.7 billion cubic metres in 2000, and 155.8 billion cubic metres in 2005, the report says.

LNG trade levels are expected to reach just over 183 billion cubic metres in 2010 - an overall rise of 84 per cent.

The main focus for LNG demand from 1995-2010 is expected to be from Japan, South Korea and Taiwan.

Japan is expected to remain the world's largest LNG importer with trade totalling nearly 80 billion cubic metres a year by 2010, about 36 per cent higher than in 1995.

The report says LNG trade expansion is expected to be more dynamic in Indonesia and Malaysia due to their expansion projects.

New markets in Asia such as Thailand, India, China and the Philippines are expected to bolster LNG trade over the medium to long term to 17.5 billion cubic metres a year.

Shipping demand growth is still expected to exceed trade volume expansion due to the rise in relatively long-haul trades from sources like Indonesia, Australia, Nigeria, Qatar and Oman.