[SMM Aluminum Flash News] China’s Coal-Based LPG Expansion Set to Reshape Domestic Trade Flows

Published: Jun 9, 2026 14:27

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China’s coal-based LPG sector is set for rapid expansion as a wave of coal-to-olefins and coal-liquefaction projects come online between 2026 and 2028. Coal-based LPG marketable volume reached 1.8 million tonnes in 2025, accounting for about 7% of national LPG supply. Supported by significant cost advantages, coal-based production margins exceed oil-based routes by more than RMB1,000 per tonne. Most new capacity will be concentrated in Xinjiang and Inner Mongolia, potentially reshaping domestic LPG trade flows. Analysts expect LPG shipments from southern Xinjiang to increasingly move toward southwestern China, adding supply pressure to markets such as Chongqing and Sichuan. However, the start-up of the Tarim Ethylene Phase II project is expected to increase local LPG consumption and reduce regional oversupply risks.

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