China Approves Underground Propane Cavern in Ningbo as Bonded Warehouse
China has approved a 2 million cubic meter underground propane cavern in the eastern city of Ningbo as a bonded warehouse, allowing duty-free storage of imports that can later be supplied to the domestic market or re-exported, according to a news article published on the Ningbo Customs website on Sept. 10.
The operator, Ningbo Baidinian Liquefied Petroleum Gas, a subsidiary of Matheson Energy, said the approval comes as its existing bonded propane facilities are already near full capacity and struggling to meet the needs of nearby processors and international markets, according to the news release.
Located in the Daxie Development Zone of Ningbo, the facility is the world’s largest operational propane cavern, able to store and transfer about 5 million mt per year. The company also operates an LPG import terminal that handled 2.37 million mt in 2024, or 39% of Ningbo’s total LPG imports, Vortexa data showed.
The bonded cavern will support the development of domestic propane futures trading, Fan Xue Chao, head of futures business at Matheson Energy, was quoted as saying. He noted that Chinese firms now trade propane futures mainly on offshore exchanges, but the new facility should accelerate the launch of a domestic contract and offer local enterprises more effective risk-hedging tools.
China already lists LPG futures on the Dalian Commodity Exchange, but the contract is based on specifications geared to the domestic market rather than export-grade propane.
The approval comes as Chinese importers continue to navigate uncertainty over U.S.-China LPG trade. While some expected U.S. LPG flows to resume after the tariff-pause extension announcement in early August, many propane dehydrogenation, or PDH, operators remain reluctant to commit to U.S. cargoes, cautious of a sudden policy reversal.
Analysts said the bonded cavern offers Chinese buyers a safety net, acting as a storage buffer against potential swings in trade policy and giving operators greater flexibility in managing propane feedstock.
“It is beneficial for PDH operators, many of whom are already under pressure from feedstock costs this year amid the trade war. The ability to hold propane in bonded storage and draw it only when the market is favorable helps protect margins,” a market source said.
China is a key LPG importer in Asia, particularly of propane for the petrochemical sector. Vortexa data showed China imported 3.06 million mt of LPG in August, including 686,300 mt from the U.S. September imports are estimated at about 2.95 million mt, with U.S.-origin volumes at roughly 767,000 mt. Both figures remain below pre-tariff levels, when U.S. cargoes often exceeded 1 million mt a month and accounted for about half of China’s imports.
— Reporting by Cheryl Lee, clee@opisnet.com; Editing by Lujia Wang, lwang@opisnet.com