LPG Special Report: Rising US LPG supplies face headwinds from China and Europe’s weak demand
Rising US LPG exports are faced with mixed global demand sentiments. China’s robust import momentum could be stalling, whilst Europe’s is continuing on its long-term decline. VLGC freight rates are struggling to see a recovery as fleet expansion has outpaced tonnage demand growth.
28 November, 2024
Key report takeaways:
- US LPG exports continue to grow despite higher winter demand, driven by robust domestic production.
➔ Nearly 930kbd of additional terminal export capacity expected to come online by 2026. - In LatAm, LPG imports have receded to 2023 levels in November after all-time highs in October. European LPG imports have risen marginally, with potential upsides if winter temperature falls further.
- Middle East LPG exports have seen limited growth this year, while more supplies are pivoting to India, taking volumes away from Northeast Asia. Generally strong Indian LPG imports could set a record in November.
- On the contrary, China’s LPG imports are on-track to sink to a 9-month low this month, weighed down by weak PDH margins.
- In terms of shipping, our data shows increasing ballast VLGC arriving in the Gulf of Mexico, signalling stronger US Gulf exports. Unlike last year, Panama Canal waiting and transit times are not expected to spike, given reports of ample water levels at the Gatun Lake.
- Scheduled VLGC deliveries in 2025 are estimated to be down over 20% yoy. But the additional tonnage is likely to pressure VLGC rates further.
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