EIA: US propane exports hit record in December 2023

U.S. propane exports to Asia increased 25 percent in 2023 compared to 2022. Source: U.S. Energy Information Administration, Petroleum Supply Monthly

U.S. propane exports averaged a record 1.9 million barrels per day (bpd) in December 2023 – the highest since the U.S. Energy Information Administration (EIA) began collecting the data in 1973, the federal agency reported.

According to the EIA, increased exports resulted from the highest propane price spread between the U.S. Gulf Coast and East Asia in a decade due to petrochemical and space heating demand.

More propane is exported from the United States than is consumed in the country, the EIA points out. Propane is consumed globally for space heating and is increasingly used as a petrochemical feedstock in East Asia. Propane consumption as a petrochemical feedstock in East Asia has been driven by demand for propylene, a base chemical used to manufacture polypropylene.

Recently, more propane exported from the United States has been heading to Asia because Saudi Arabia’s voluntary reductions in crude oil production have reduced propane exports from that country. Asia is the primary market for propane exports from the Middle East. Propane exports from Saudi Arabia to Asia fell by 22 percent from the first half of 2023 to the second half, according to ship tracking data reported by the EIA. U.S. propane exports to Asia grew 6 percent over that same period.

Annual U.S. propane exports to Asia grew 25 percent in 2023 compared with 2022, a 190,000-bpd increase, the EIA reports. Most U.S. exports to Asia go to Japan, South Korea and China. China accounts for most of the growth in U.S. exports to Asia – U.S. propane exports to China grew by 49 percent in 2023. U.S. propane exports to Europe also grew, increasing 20 percent from 2022 to 2023, in the wake of Russia’s invasion of Ukraine and European Union countries reducing their propane imports from Russia.

In November 2023, the difference in propane prices between East Asia and Mont Belvieu was the greatest since 2014, EIA data shows. The price spread increased to 74 cents per gallon during the week of Nov. 7, 2023, a 71 percent increase from the same week a year earlier. A high discount for Mont Belvieu propane incentivizes East Asian buyers to import less expensive propane from the U.S.

Expansion projects at U.S. propane export terminals in 2019 and in 2023 have allowed U.S. exports to increase by more than 700,000 bpd, nearly double the total U.S. exports in 2018, the EIA reports.

The Mont Belvieu/East Asia price spread increased to 74 cents a gallon in November 2023. Source: U.S. Energy Information Administration, Petroleum Supply Monthly

Panama Canal update

U.S. LP gas and ethane exports through the Panama Canal rose in January 2024 with a return to vessel traffic through the shipping channel as drought conditions eased, the EIA also reports.

Transit volumes of LPG and ethane had fallen in late 2023 amid a historic drought at the canal. In November and December 2023, 23 percent less U.S. LPG flowed through the canal than on average from January to October 2023. U.S. ethane flows through the canal were 73 percent lower. Tankers carrying U.S. LPG started traveling more frequently through the Suez Canal or around the Cape of Good Hope.

Transit slots that opened up in January allowed more very large gas carrier voyages through the Panama Canal, increasing January 2024 LPG transit volumes by 12 percent and ethane transit volumes by 67 percent compared with December 2023, according to the EIA. LPG and ethane together account for 63 percent of the U.S. petroleum product exports that cross the Panama Canal.