U.S. propane exports have increased every year since 2007
U.S. propane exports averaged a record 1.8 MMbpd in 2024, the most since the U.S. Energy Information Administration (EIA) began collecting this data in 1973. U.S. propane exports increased for each of the last 17 years, with growth driven by higher demand in East Asia, mainly China, and a widening propane price differential between U.S. and global benchmarks.
Propane is consumed globally in the residential and commercial sectors for uses such as space heating. It’s also used as a petrochemical feedstock to produce propylene and ethylene, key feedstocks in plastic production.
Record U.S. propane production has supported the rise in propane exports. Propane production, which is a byproduct of natural gas processing and crude oil refining, has increased rapidly over the past 10 years as U.S. natural gas output has grown. Higher propane production has led to lower U.S. propane prices relative to Asia, underpinning the record export levels.
Infrastructure investments have also played a crucial role in accommodating growing shipments. Expansion projects at U.S. propane export terminals that started up in 2019 and in 2023 have allowed U.S. exports to increase by more than 700,000 bpd. U.S. propane exports surpassed 2 MMbpd in November 2024 for the first time, as petrochemical and space heating demand in Asia increased.
Growing propane demand in Asia. Annual U.S. propane exports to Asia grew 13% in 2024 compared with 2023, a 131,000-bpd increase, with most going to Japan, South Korea and China. Chinese consumption accounts for most of the growth in U.S. exports to Asia; U.S. propane exports to China grew by 40% in 2024. Increasing propane exports to Asia are driven in part by the region’s increasing demand for propylene. Propylene is used to manufacture polypropylene, a versatile plastic used in many products including car interiors, packaging, and personal protective equipment.
Propane demand in China has grown rapidly, reflecting a wave of new propane dehydrogenation units, which manufacture propane into propylene. In 2024, most of the propane imports into China originated in the United States (32%), followed by Iran (17%), Qatar (7%), and the United Arab Emirates (UAE) (3%).
Chinese imports of U.S. propane have fluctuated in recent years. China imposed retaliatory tariffs on U.S. propane in 2018, and China’s propane imports from Iran, Qatar and the UAE increased, displacing imports from the United States. In 2020, China waived the 26% tariff on U.S. propane, and U.S. propane imports significantly increased. Even though China imposed retaliatory tariffs on U.S. crude oil and liquified natural gas (LNG) this year, China did not include propane, according to the National Propane Gas Association, the main U.S. propane trade association.
Recently, U.S. producers and traders have found export opportunities in Asia because voluntary reductions in crude oil production from OPEC+ member countries have also reduced propane production from those countries in the last two years.
U.S. propane exports to Europe stayed relatively flat from 2023 to 2024, after previously increasing in response to Russia’s full-scale invasion of Ukraine. EU countries reduced propane imports from Russia, and in 2022, they started importing more U.S. propane, anticipating a ban on Russia’s liquefied petroleum gas (LPG), which includes propane and butane). The 12th package of EU sanctions on Russia in December 2023 included a ban on LPG from Russia. U.S. propane exports to Europe reached over 200,000 bpd in 2023, a new record, and averaged nearly the same amount in 2024.
Price considerations. The increase in propane demand as a petrochemical feedstock in Asia supports higher propane prices in East Asia compared with U.S. Gulf Coast spot prices, incentivizing exports from the United States to the region.
In 2023, the difference between propane prices in East Asia and Mont Belvieu (the U.S. propane price benchmark) increased to $0.42 per gallon (gal), the biggest difference since 2014. The price spread widened further to $0.43/gal in 2024. When price spreads are wide, East Asian buyers will generally seek to import less expensive propane from the United States.
Meanwhile, the large supply of propylene from increased production amid growing propane dehydrogenation capacity in East Asia has led to low propylene spot prices. East Asia propylene prices averaged $1.63/gal last year, the lowest since 2020. Despite low propylene prices, propane demand for petrochemical consumption remains high.
Transit chokepoint’s impact on prices. Most of the propane shipped from the U.S. Gulf Coast to East Asia transits through the Panama Canal. Shipping through the Panama Canal from the U.S. Gulf Coast to East Asia takes around a month, about two weeks less than transiting around the Cape of Good Hope at the southern tip of Africa.
In 2023, water levels at Gatún Lake, which supplies the water used to operate the canal’s locks, were the lowest since at least 1965, when recordkeeping began. Water conservation efforts reduced traffic, leading to delays at the Panama Canal. Some vessels began avoiding the canal and taking longer, more costly routes, which in turn elevated freight rates and propane prices in East Asia.
Freight rates for propane heading from Houston, Texas, to Chiba, Japan, through the Panama Canal rose 37% from 2022 to 2023 as boats were delayed transiting the Panama Canal or took longer routes. In 2023, as few as 24 vessels were allowed to transit the canal per day, down from the usual 36. However, water levels at the Panama Canal rose throughout 2024 as a La Niña weather event brought more rain to the region, with water levels ending 2024 at the second-highest level in recorded history (only slightly below 2020 levels). Operations are now back to normal, and freight rates for propane on the Houston to Chiba route dropped 33% in 2024.
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