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The LPG Forecast: 2022 Edition


FGE's comprehensive assessment of the global LPG market.

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Overview

FGE’s annual LPG Forecast provides a comprehensive summary and assessment of the global LPG market, divided into two main geographical areas: East and West of Suez. In this year’s report, FGE examines the industry dynamics on a country, regional and global level and then derives an assessment of LPG trade and shipping balances, as well as an outlook on prices, margins and shipping rates.

From pandemics to Polar Vortexes, 2021 was another year to remember. Many will remember the images of Texas “freezing over” after February’s Storm Uri and how the winter storm exposed the dependency of the global supply chain in the USA. Uri set the scene for another upside-down year. Following the impacts of COVID-19 and Storm Uri, the US supply recovery was lacklustre, and with the Middle East failing to respond, LPG balances were looking very tight.

As we look set to have another La Niña meteorological event this winter, many are wondering whether the market has enough supplies for the Northern Hemisphere’s winter and, more importantly, at what price.

Some of the features of the market in 2021 were as follows:

  • Capital discipline was still the name of the game across the US shale patch, which saw a more measured return to growth (perhaps more than many were expecting). Many producers were much less willing to ‘put their foot on the gas pedal’ than they had in recent boom years.
  • In Asia, PDH buyers became the highest bidders in the market, setting the limits on price as swing cracker demand became an afterthought for much of the second half of the year.
  • After ramping up their vaccination drives, the European and US markets have seemingly recovered to their pre-COVID-19 levels, but the virulence of the Delta variant hampered the recovery in much of Asia.
  • The Chinese LPG futures contract came of age this year, with significant volumes traded on the Dalian Commodity Exchange, giving it a fast-developing influence over the FEI contract.
  • Shipowners finally showed their cards for 2023, with a record VLGC orderbook for the year.

 

What will 2022 have in store? Between ongoing geopolitical considerations in the Middle East, an OPEC+ that feels it’s got its mojo back, most of the market writing off a US recovery, and the continued march of petrochemical additions, most are looking at another tight market next year. Could it be a bit too early to call this a “new normal”?

And let’s not forget the green Energy Transition, which is now in full swing. Shipowners are increasingly adopting LPG as the solution to future-proof their fleets as they look for more creative options through the clogged Panama Canal. In Africa, aspirations are coming to fruition as infrastructure plans move forward. In Latin America, dreams of LPG becoming a widely adopted auto fuel have started to become a reality.

However, the Energy Transition isn’t just the sunlit uplands that many have been talking about. Real challenges are emerging on the supply side as lacklustre funding for oil and gas projects makes it increasingly difficult to support supplies needed to sustain LPG as a competitive fuel and feedstock in many parts of the world.

 

Outlook For 2022

  • An in-depth look at the potential for US upstream NGL supplies in 2022, mapped from the gas plant to terminal.
  • An in-depth look at the potential for Middle Eastern producers to step up, including more supplies from Iran and OPEC member states.
  • Heading towards another down-cycle for olefins? We look at the wave of capacity additions in Asia.
  • We are projecting a more balanced year next year as supply growth is anticipated to be higher than expected.

 

Beyond 2022

  • 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?
  • A long-term look at olefin market developments in Asia, the US & Europe over the next 25 years (and how they will support LPG use).
  • Problems Transitioning: What will the move to reduce oil/gas investment mean for LPG supply?
  • What is the realistic potential of bioLPG as a fuel source over the next 20 years?
  • Given the surging orderbook for new vessels, how does 2023 look for LPG balances?

 

Deliverables

  • Two hard copies of the report
  • One PDF soft copy of the LPG Forecast Update (available at the middle of every year)
  • Weekly LPG Confidential Report
  • Associated Excel data file
  • One PDF soft copy of the report
  • Associated Excel data file
  • A presentation of FGE's latest analysis on the global LPG market
  • 15 hours of consultation with FGE's LPG team available per year for telephone discussions and email inquiries
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