US Propane Exports Hit Record High, Fueled by Growing Asian Demand and Competitive Prices
In March 2023, the United States achieved a new milestone in the energy sector as propane exports hit an all-time high of 1.7 million barrels per day (b/d), marking the highest level since data collection began in 1973. Propane serves as a widely used energy source for space heating globally and is utilized as a raw material for petrochemical production.
Several factors contributed to this record-breaking export level, including reduced demand for propane within the United States during the recent winter season and increased propane production. The lower propane prices in the United States compared to Northwest Europe and Asia played a significant role in supporting the surge in export volumes. Over the past decade, propane production has experienced rapid growth due to the expansion of natural gas output in the United States, as it is a byproduct of natural gas processing.
Furthermore, the expansion of U.S. propane export terminals in recent years has facilitated increased exports. In 2022, annual propane exports reached another record high, averaging 1.4 million b/d.
The demand for U.S. propane in Asia has been on the rise, primarily driven by the increasing need for propylene in the region. Propylene, a chemical derived from propane, is a crucial component in the production of polypropylene, a versatile plastic used in various applications such as car interiors, packaging, and personal protective equipment.
Japan is the largest importer of U.S. propane, followed by China and South Korea. In 2022, Asia accounted for approximately 53% of U.S. propane exports, with Japan, China, and South Korea collectively representing nearly 84% of the Asian propane market. Notably, U.S. propane exports to China have experienced significant growth, reaching 211,000 b/d in March 2023 compared to 92,000 b/d in March 2022, with an average of 176,000 b/d during the first three months of 2023. China’s propane demand is expected to continue increasing, as several new propane dehydrogenation (PDH) units commenced operations in 2022, and six more are projected to begin operations in 2023.
In 2022, U.S. propane exports to Europe reached record highs of 236,000 b/d during the summer. This surge was driven by uncertainty regarding propane supply following Russia’s full-scale invasion of Ukraine. During the first three months of 2023, U.S. propane exports to Europe averaged 247,000 b/d.
The growing demand for propane as a petrochemical feedstock in Asia has contributed to higher global propane prices, thereby incentivizing increased propane exports from the United States. Propane prices experienced significant increases in both Asian and Northwest European trading hubs during the winter season. Although spot prices at the Mont Belvieu export hub in the United States also rose, the rate of increase was comparatively slower.
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