Propane market: A look into dynamics of US exports

Propane is an important winter fuel in the U.S., which belongs to the LPG family, and holds a pivotal role in powering homes, industries, and vehicles worldwide. Derived as a by-product of natural gas processing (NGL) and crude oil refining, propane's versatility and efficiency have propelled it into a booming global market. Let's delve into the intricacies of the propane industry, with a particular focus on the United States' role in exports and the evolving global landscape.

Propane market size and share

The propane market has been experiencing significant growth in recent years, with projections indicating a remarkable trajectory ahead. Valued at $88.77 billion in 2022, the global propane market is expected to reach $225.10 billion by 2030, boasting a robust compound annual growth rate (CAGR) of 12.5%, according to recent market insights from Fortune Business Insights. Among the key players shaping this market, ExxonMobil Corporation stands out, wielding substantial influence and dominance.

Current outlook in US propane exports

Recent fluctuations in LPG prices at key trading hubs like Mont Belvieu in Texas and Conway in the state of Arkansas, have sparked intrigue among industry observers. The surge in prices initially stemmed from a combination of heightened demand and supply disruptions during January 2024 in North America’s severe winter storm, which brought several inches of snow to the Upper Midwest and caused a tornado outbreak in the South along with heavy rains, flooding and wind to the East Coast of the United States. Following the storm's reduction and the subsequent moderation of temperatures, U.S. propane prices embarked on a downward trajectory for several weeks. Then, after the storm, when temperatures got warmer, propane prices experienced a notable rebound, despite no significant alterations in weather patterns and the end of winter demand looming closer. 

Particularly, US LPG exports experienced a notable decline in January, with a decrease of 25,000 b/d to 621,000 b/d, according to the US Energy Information Administration (EIA). The overall exports of natural gas liquids (NGLs) and LPG totalled 809,000 b/d, marking a month-on-month decline of 10,000 b/d, according to data available in Kpler’s platform. US Propane exports were particularly impacted, dropping by 29,000 b/d to reach 493,000 b/d. Butane exports saw a slight increase of 2,000 b/d, totalling 55,000 b/d, and isobutane exports were reported for the first time since December 1988, reaching 5,000 b/d.

The landscape of U.S. propane demand has undergone a profound transformation, with domestic demand now constituting only 28 per cent of the total propane demand, compared to its predominant position in the market a generation ago. This shift is underscored by the emergence of the export category, now commanding 62 per cent of overall U.S. propane demand. This transition has led to increased complexity in predicting US propane prices. Previously, forecasting relied on factors like domestic consumption patterns and propane inventory levels. However, with a larger portion of propane now entering the global market, price determination has become more intricate.

Looking ahead

Moving forward, projections suggest that US propane exports will remain robust throughout 2024, driven by increasing global demand. This underscores the importance for industry experts to grasp the intricacies of US propane supply and demand dynamics and stay attuned to LPG export trends worldwide, leveraging insights from Kpler’s data platform.

Did you know?‍

‍

All of the data and insight from this article came from the Kpler platform. Enabling commodity traders, producers and investors to reduce risk and maximise returns, to make better decisions, faster with real-time, unbiased expert research, AI driven analytics, and precise price forecasting.

See these in action. Get your demo of the service now.

‍

‍