FGE’s annual LPG Forecast is a comprehensive assessment of the global LPG market, divided into two main geographical areas, East and West of Suez. In this forecast, FGE examines the industry dynamics on a country and regional level, and then derives an assessment of the trade balances—where propane and butane is moving and why, feeding into this forecast of prices and margins.
From trade wars to rocket attacks, we thought 2019 was a year to forget for the global LPG industry. However, 2020 surpassed even our wildest expectations. Despite hopes of a boom in US-China trade following the easing of tariffs, a global pandemic stopped things in its tracks. As people stopped moving around, transport fuel demand collapsed and with it a large chunk of global oil supply.
- While in contrast to transport fuel demand, LPG demand remained resilient. With a third of the global population “locked down”, we saw a record 18 spot cargoes in April/ May moving to meet LPG needs for families in India to keep gas stoves burning. Not all Res/Com markets were spared, however, with the commercial side of the Residential/Commercial equation in Asia Pacific suffering as hotels, local hawker markets and restaurants were forced to close.
- And for Petrochemical markets, a transport fuel problem became an LPG problem as surplus naphtha volumes pushed out LPG from the cracker pool for large parts of the year. Chinese PDH and cracker start-ups were pushed back, but many are hoping for a more “normal” year in 2021 with many of these projects finally coming to fruition late in the year.
- LPG shipping wasn’t unscathed after a collapse in the cracking, weak arbitrage economics and restrictions at yards left a dearth of freight capacity idle with many crews isolated on-board ships as ports implemented COVID restrictions on crews disembarking. Things swung back around with the seemingly perennial problems at Panama and a record year of fogs and tropical storms, with shipowners once again smiling while charters wince at the state of VLGC freight rates.
What will 2021 have in store? Geopolitics are always center stage for the LPG industry, and 2021 will be no different. With a new US President comes a new slate for international relations. The market is looking towards the potential removal or easing of sanctions on Iranian LPG, while things remain uncertain regarding China-US relations and LPG tariffs.
Outlook For 2021
- We look at the various scenarios at play post the US election and it’s impact on LPG: China LPG tariffs, a recovery in Venezuelan LPG trade as well as potential for Iranian supply.
- An in-depth look at the main import and export projects to look at for 2021, following a fair number of COVID-delays./li>
- A quarterly outlook at how balances might evolve through 2021.
- What will slowing US export growth and the rise of Middle Eastern supply in the mid-2020s mean for the structure of global LPG markets going forward?
- The Energy Transition on the Supply Side: what will the move to reduce flaring/venting from the upstream mean for LPG supply globally?
- An in-depth look at LPG as a transition fuel in Africa – what are the policies and what is the potential?
- All aboard! What are driving factors behind the shift to dual fuel LPG systems, where does it work and what is the potential for LPG bunker fuel outside of the LPG fleet?