US propane exports increase yearly since 2007

Propane is consumed globally in the residential and commercial sectors for uses such as space heating. It is also used as a petrochemical feedstock to produce propylene and ethylene, key feedstocks in plastic production.

Record US propane production has supported the rise in propane exports. Propane production, which is a by-product of natural gas processing and crude oil refining, has increased rapidly over the past 10 years as US natural gas output has grown. Higher propane production has led to lower US 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 US propane export terminals that started up in 2019 and in 2023 have allowed US exports to increase by more than 700 000 bpd. US propane exports surpassed 2 million bpd in November 2024 for the first time, as petrochemical and space heating demand in Asia increased.

Growing propane demand in Asia

Annual US 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 US exports to Asia; US 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 US (32%), followed by Iran (17%), Qatar (7%), and the UAE (3%).

Chinese imports of US propane have fluctuated in recent years. China imposed retaliatory tariffs on US propane in 2018, and China’s propane imports from Iran, Qatar, and the UAE increased, displacing imports from the US. In 2020, China waived the 26% tariff on US propane, and US propane imports significantly increased. Even though China imposed retaliatory tariffs on US crude oil and LNG in 2025, China did not include propane, according to the National Propane Gas Association, the main US propane trade association.

Recently, US 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.

US 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 US propane, anticipating a ban on Russia’s liquefied petroleum gas (LPG, which includes propane and butane). The twelfth package of EU sanctions on Russia in December 2023 included a ban on LPG from Russia. US 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 US Gulf Coast spot prices, incentivising exports from the US to the region.

In 2023, the difference between propane prices in East Asia and Mont Belvieu (the US propane price benchmark) increased to 42¢/gal., the biggest difference since 2014. The price spread widened further to 43¢/gal. in 2024. When price spreads are wide, East Asian buyers will generally seek to import less expensive propane from the US.

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 US$1.63/gal. in 2024, 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 US Gulf Coast to East Asia transits through the Panama Canal. Shipping through the Panama Canal from the US 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.

This article comes courtesy of the US Energy Information Administration.

Read the article online at: https://www.hydrocarbonengineering.com/petrochemicals/14032025/us-propane-exports-increase-yearly-since-2007/