LPG Special Report: Can Asia’s demand keep pace with US and Middle East supplies?
This summer, the seasonal slowdown in global LPG demand has become a bigger challenge for the US and Middle East amidst their rising production. Weak petrochemical margins are expected to cap Asia’s import appetite, with growing VLGC tonnage supply limiting upsides on freight rates.
27 August, 2024
Key report takeaways:
- Robust LPG exports from the US and Middle East have been soaked up by healthy demand in Asia.
- The easing of Panama Canal restrictions has led to a rebound in VLGC transits, though some vessel owners still prefer to transit via the Cape of Good Hope for the return journey from Northeast Asia to the US Gulf.
- Europe’s LPG imports retreated seasonally and were further pressured by weak petrochemical and industrial demand.
- In contrast, China’s LPG imports surprised with a record high in July.
- Healthy demand from existing PDH plants has been bolstered by the addition of six new PDH plants this year.
- However, expectations of further growth in China’s LPG imports are tempered by ongoing weakness in petrochemical margins.
- India shows strength, with robust import growth driven by strong economic momentum and LPG cylinder discounts stimulating demand.
- Nearly 95% of scheduled LPG carriers this year have been delivered, and ample tonnage supply have kept VLGC rates suppressed overall.
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