2025 outlook for LPG: India’s demand will be entirely from the residential and commercial segment

LPG production is expected to remain strong globally, with the US/Canada and the Middle East showing increases in production right up to 2025. While Middle East production will continue to grow strongly, a big chunk will be consumed internally. On the other hand, global LPG demand( Indian LPG projects) will also grow, led by Asia and Middle East.

2025 projections show residential and commercial LPG demand growing steadily but demand for LPG for use in chemicals and petrochemicals will grow faster. Roughly half of the global demand up to 2025 is in five countries, including India. China and India are the major drivers of global residential and commercial demand growth.

China’s demand will be a mixture of both while India’s will be almost entirely residential and commercial.The US will export propane because domestic demand can’t keep up with shale-based production, even at lower oil prices. Exports will also go up as domestic demand get saturated and export terminals become available.

Middle East to take care of all of Indian demand: India does not figure in the top 10 LPG markets when ranked by demand for chemical use of LPG. Data shows that global ethylene demand is growing mainly based on use of ethane. But typical yields of ethylene cracker feedstocks shows that ethane has a much higher yield to ethylene than heavier feedstocks.

In North East Asia, ethylene production growth is coming mainly from naphtha and coal. The outlook up to 2025 shows that the US will remain the world’s largest LPG exporting country. A country-wise export projection is given here up to 2025. The dramatic increase in US exports have resulted in major changes in global LPG trade flows. The Middle East will continue to dominate imports to South East Asia. The Middle East is ideally situated to supply to India and therefore has a monopoly.

The other conclusions of the projectiosn are:
 Water borne LPG exports have become increasingly rich in propane.
 Propane prices have weakened against crude oil for about a decade.
 US propane prices for example have been depressed by a lack of export terminal infrastructurermal. butane prices will also need to maintain a differential to other global benchmarks.

Source: Indian PetroPlus