TODAY IN ENERGY: U.S. propane exports established a new record in December 2023

Data source: U.S. Energy Information Administration, Petroleum Supply Monthly

U.S. propane exports averaged a record 1.9 million barrels per day (b/d) in December 2023, the highest since we began collecting this data in 1973 in our Monthly Energy Review. 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 here. 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, a fiber used to make car interiors, packaging, and personal protective equipment.

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% from the first half of 2023 to the second half, according to ship tracking data. U.S. propane exports to Asia grew 6% over that same period.

Annual U.S. propane exports to Asia grew 25% in 2023 compared with 2022, a 190,000-b/d increase. 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% in 2023. U.S. propane exports to Europe also grew, increasing 20% from 2022 to 2023. After Russia’s full-scale invasion of Ukraine, EU countries reduced propane imports from Russia, and in 2022 they started importing more U.S. propane, anticipating a ban on Russia’s liquefied petroleum gas (LPG, which includes propane and butane). The 12^th package of EU sanctions on Russia in December 2023 included a ban on LPG from Russia.

Data source: Argus Freight

In November 2023, the difference in propane prices between East Asia and Mont Belvieu was the greatest since 2014. This price spread increased to 74 cents per gallon during the week of November 7, 2023, a 71% increase from the same week a year earlier. When the discount for Mont Belvieu propane is high, East Asian buyers have more incentive to import less expensive propane from the United States. Drought-related delays and longer re-routings away from the Panama Canal increased freight rates, elevating the prices for propane from East Asia.

Propane production is a byproduct of natural gas processing. Propane production in the United States has increased rapidly over the past 10 years as U.S. natural gas output has expanded. 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 b/d, nearly double the total U.S. exports in 2018.