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Propane exports hitting historic high levels on robust Asian demand

HOUSTON, May 31, 2017 (PCW) -- US propane exports hit an all-time high of 32.661 million barrels (1.05 million b/d) last December and, although that number has fallen precipitously in the last few months on the back of thinning arbs, export levels remain historically strong.

The jump in exports has come on the back of a voracious appetite in Asia for US propane. A drilldown into US trade data (see chart below) shows that in 2014, about 20% of US propane exports went to Asia, compared with South/Central America, which took up the lion’s share of about 45%.

In 2016, Asia’s share was nearly 50%, compared with South/Central/America’s nearly 30%. For the year-to-date, Asia is making up a nearly 60% of US propane export demand with South/Central America coming in at 20%.

Parsing the data even further, it is clear that an increase in Chinse demand for US propane exports is one of the major factors in this overall Asian uptick. China made up nearly 20% of overall Asian demand for US propane in 2014 but between 2016 and this year it has upped that share to 30%. The increase has been attributed to increasing demand from new PDH units in China.

In 4Q 2016, two new units came online in China – Oriental Energy’s 1.45 billion lbs/yr plant in Ningbo and Hebei Haiwei’s 1.1 billion lbs/yr facility. These collectively could consume about 54,000 b/d of propane.

The other main source of Asian demand is from Japan, which came in at 65% of Asian demand in 2014, before dropping to around 40% in 2016 and the year to date. Half of Japan’s propane demand comes from household uses, namely cooking and home heating. The slowdown in US propane exports to that country at the end of last year and into 2017 was attributed to healthy inventory levels as Japan pre-bought ample volumes ahead of the winter heating season.

Going forward, Asian sources and shipping brokers said despite seemingly negligible arbs, a relatively large number of cargoes still are departing from US ports to the Far East as Chinese demand is expected to keep Asia as US propane exports’ top destination for the foreseeable future. -- Samantha Hartke

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