U.S. waterborne LPG (propane/normal butane) exports reached another all-time high in February, driven by record volumes out of the Gulf Coast (PADD 3). According to RBN’s NGL Voyager report, February LPG exports increased to 2.34 MMb/d, which was 45 Mb/d higher than the December 2023 record and 337 Mb/d, or 17%, more than February 2023 (see chart below). For 2023, EIA data showed annual U.S. LPG waterborne shipments were 2.06 MMb/d, up 13.4%, or 243 Mb/d, from 2022. This compares with an increase in Gulf Coast LPG exports of just 74 Mb/d, or 4.2%, from 2021 to 2022. As a result of the strong growth in exports, dock capacity on the Gulf Coast has gotten very tight. Not surprisingly, several Gulf Coast LPG terminal expansion projects are underway but will not come online for another 18-24 months.
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Running on Empty - Propane Exports Continue to Pull U.S. Inventories Lower
The EIA report on propane inventories that came out yesterday was a shocker. This time of year, stocks are supposed to be building toward the levels needed to get U.S. propane markets through the winter season. But the numbers released on Wednesday showed an inventory decline, resulting in inventory balances now below the five-year minimum. The culprit, of course, is exports, with 1.4 MMb/d of them reported last week, a 17% gain over the year-to-date average. And these cargoes to overseas markets are happening even with propane prices in the stratosphere: more than double where they stood this time last year. Propane marketers were hoping that higher prices would slow down exports, but so far that is not happening. In today’s blog, we examine U.S. exports of LPG — propane plus butane — and discuss what may be ahead for these markets.
Can't Get Enough - Gulf Coast LPG Export Dock Capacity Maxing Out; What Happens to U.S. Markets?
Gulf Coast LPG export capacity is tight again, and it’s going to get worse before it gets better — terminal capacity to load more barrels of propane and butane simply has not kept up with production gains. A number of new LPG dock expansions and greenfield projects are in the works, but they are 18 months or so away. In the meantime, production keeps rising, inventories are high, and it’s very unlikely we will see enough cold weather to balance the propane market. Bottom line: 2024 is shaping up to be a tough year for propane and butane prices. In today’s RBN blog, we examine what has been happening with exports, the looming dock capacity constraints, and the projects that will eventually relieve the imbalance.
