Changes in the price difference between household gas and n-butane

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The reasonable price difference between traditional household gas and n-butane is 50–100 yuan per ton. Yet why has this gap gradually widened in recent comparisons? As shown in the figure, the trends of n-butane and household gas are generally similar to those of the C4 fraction obtained from the feed gas. Both are affected by fluctuations in the feed gas, which leads to corresponding increases or decreases in their prices. It can be simply assumed that the condition of the market for this C4 fraction, as a raw material, and its price level directly influence the price trends of downstream products. However, the prices of civilian liquefied gas and industrial n-butane, which have essentially the same main components, differ by a reasonable amount due to variations in their n-butane content and their different applications. However, looking at the price trends of civilian gas and n-butane over the past year, there is generally a price difference of 50–100 yuan per ton between the two. Based on data from previous years, this price difference remains relatively constant and falls within a reasonable range. However, after this year’s National Day holiday, starting in mid-October, the price difference between n-butane and conventional household gas exceeded 150 yuan per ton on average, and this gap showed a tendency to increase, reaching over 300 yuan per ton on several occasions. What exactly caused such significant changes in two gases that previously had relatively stable prices? With the reform of the oil and gas industry in 2015, the National Development and Reform Commission issued a notice allowing greater flexibility regarding the import of crude oil. This was like a much-needed rainfall for the local refining industries that had previously relied on the \"Big Three\" oil companies. Local refineries, which did not have the right to import crude oil or sell refined products, had been struggling to survive for many years; in previous years, the operating rate of such refineries in Shandong was around 40%. According to incomplete statistics, since the second half of last year, the utilization rate has soared to over 60%. With the increase in operating rates and the enhancement of refineries’ processing capacity, production of liquefied gas as a by-product of oil refining has also increased, thereby providing a good supplement to the supply side. The overall trend for civilian gas remains stable, with demand also remaining relatively steady; there are few instances of downstream entities making bulk purchases or stockpiling. Furthermore, we know that the deep processing of alkanes, as an industry chain that has only emerged in recent years, is crucial for the overall deep processing of gases. Whether it is the dehydration of isobutane to produce isobutylene for use in MTBE, or the conversion of isobutane into alkylation oils, isobutane serves as a raw material at the upstream stage of these products. Its price has a significant impact on the profits of downstream industries. As of mid-October, prices of isobutane in Shandong region have remained high, and coupled with relatively low production levels by refineries, this has further exacerbated the already sluggish situation in the oil products market. Compared to using isobutane, which has a higher purchase price, the cost of isobutane isomerization is lower, which is why this method is widely favored. Additionally, the high operating rate of isobutane isomerization plants has led to an increase in the price of isobutane; the price difference between it and household gas once reached around 300 yuan per ton.