Liquefied Petroleum Gas (LPG) Price Index Tracker: Demand, Supply, and Future Forecast

Global LPG Market Analysis – Q2 2025

Liquefied Petroleum Gas (LPG), comprising mainly propane and butane, plays a critical role across residential, industrial, and petrochemical applications. The global LPG market in the second quarter of 2025 was marked by significant downturns across all major regions, reflecting broader challenges in energy demand, weak crude oil benchmarks, and fluctuating trade dynamics. This article explores LPG price movements in North America, Europe, Asia-Pacific, and South America, analyzing the key drivers behind the shifts and assessing implications for the market outlook.

North America: Steady Downturn in U.S.LPG Prices

Price Movement

The U.S. LPG market experienced a steady 12.6% decline in Q2 2025, with both propane and butane prices sliding over the three-month period. By late June, Propane DEL Texas had fallen to USD 7.5/MMBTU, while Butane FD Texas dropped to USD 7.1/MMBTU. This sharp drop erased gains from earlier quarters and reflected a more bearish outlook.

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Key Drivers

1. Subdued Export Demand
• U.S. LPG exports, particularly to Asia and Latin America, showed a notable slowdown. Weak procurement from major importers like China, due to falling domestic benchmarks and lower Saudi Aramco contract prices, reduced U.S. competitiveness in the export market.
• Latin American demand also stagnated, particularly in Brazil and Mexico, where domestic bottlenecks and limited seasonal consumption dampened import volumes.
2. Elevated Domestic Stock Levels
• Strong domestic production, driven by robust shale gas output, resulted in higher-than-expected inventories. According to U.S. EIA reports, propane and butane stocks rose steadily throughout Q2 2025, outpacing consumption growth.
• Storage facilities in Texas and the Gulf Coast operated near capacity, intensifying downward price pressure as suppliers sought to offload surplus material.
3. Seasonal Consumption Weakness
• Spring and early summer are typically low-demand periods for LPG in the U.S., as heating consumption wanes and petrochemical demand fluctuates.
• Industrial activity slowed modestly, particularly in sectors such as construction and manufacturing, further limiting LPG use.

Market Sentiment

The combination of weaker export flows, rising stock levels, and off-season consumption created a bearish market environment in Q2. While the U.S. remains a global leader in LPG exports, its market advantage weakened as Asian and Middle Eastern suppliers offered deeper discounts.

Europe: Broadly Bearish Sentiment with Minor Fluctuations

Price Movement

In Europe, LPG prices contracted by 12.5% during Q2 2025, though the trajectory was less volatile compared to the U.S. By the end of June, Propane CFR Antwerp settled at USD 470/MT, while Butane CFR Antwerp stood at USD 475/MT.

Key Drivers

1. High Supply Availability
• Ample supplies arriving from the Middle East and the U.S. kept European inventories at comfortable levels.
• Domestic production in Northern Europe remained stable, further contributing to the supply surplus.
2. Weak Demand Fundamentals
• Mild weather conditions reduced heating-related LPG consumption, while industrial sectors continued to show sluggish activity.
• The petrochemical industry, a major consumer of propane, operated at lower rates due to compressed margins and weaker downstream polymer demand.
3. Stable but Depressed Crude Oil Prices
• LPG prices in Europe often track crude oil benchmarks. With crude oil benchmarks falling to multi-month lows during April and May 2025 before modestly recovering in June, LPG values reflected this pressure.

Market Sentiment

European buyers adopted a wait-and-see strategy, avoiding aggressive procurement in anticipation of further discounts. The bearish market tone persisted across Q2, with limited optimism for a strong rebound in the near term.

Asia-Pacific (APAC): China Leads the Downturn

Price Movement

The Asia-Pacific region also registered significant LPG price declines in Q2 2025, particularly in China, one of the largest importers. By early June, Propane CFR Shanghai settled at USD 665/MT, while Butane CFR Shanghai dropped to USD 630/MT.

Key Drivers

1. Saudi Aramco’s Reduced Contract Prices
• Saudi Aramco, a key supplier to Asia, slashed its monthly contract prices during Q2 2025 in response to weaker global crude oil benchmarks.
• These reductions cascaded across the Asian market, pushing CFR values lower as importers adjusted procurement to cheaper alternatives.
2. Falling Crude Oil Benchmarks
• The correlation between crude oil and LPG prices remained strong. With Brent and WTI both hitting six-month lows in May 2025, LPG prices in Asia mirrored the downward trajectory.
3. Export Discounts from Suppliers
• U.S. and Middle Eastern exporters offered deep discounts to secure cargoes, increasing competition and depressing prices further.
• Chinese importers, aware of these dynamics, slowed purchases in anticipation of continued price softness, adding further pressure on spot values.

Market Sentiment

China’s LPG market outlook for the remainder of 2025 remained fragile, with buyers leveraging global oversupply to negotiate favorable contracts. Regional petrochemical players, especially propane dehydrogenation (PDH) operators, benefited from lower feedstock costs, but overall sentiment stayed bearish.

South America: Brazil Shows Modest Decline

Price Movement

In South America, LPG prices showed a more modest decline compared to other regions. In Brazil, prices eased by 5.1% quarter-on-quarter in Q2 2025. Butane CFR Santos was assessed at USD 583/MT, while Propane CFR Santos held at USD 505/MT.

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Key Drivers

1. Logistical Disruptions
• Brazil continued to face logistical challenges, including port congestion and domestic distribution bottlenecks. Despite these issues, overall import flows remained relatively stable.
2. Stable Domestic Demand
• Unlike North America and Europe, LPG consumption in Brazil remained steady, supported by its widespread use in residential cooking and heating.
• However, limited industrial demand growth prevented any significant price rebound.
3. Global Market Influence
• Brazil’s LPG market was not immune to global oversupply and falling crude oil benchmarks, which kept prices capped despite local challenges.

Market Sentiment

While Brazil’s LPG prices did decline, the contraction was smaller compared to other regions. The market maintained a stable-to-soft tone, with no strong upward momentum expected in the short term.

Comparative Regional Analysis

• North America experienced the steepest price decline (-12.6%), driven by inventory surpluses and falling export demand.
• Europe followed closely with a 12.5% drop, where abundant supply and weak petrochemical demand dominated.
• Asia-Pacific (China) faced downward pressure from Saudi Aramco’s price cuts and falling crude oil, dragging propane and butane values lower.
• South America (Brazil) posted the smallest decline (-5.1%), reflecting relatively stable domestic demand despite logistical hurdles.

Across regions, the common themes included weak crude oil benchmarks, subdued seasonal consumption, and ample global supply.

Market Outlook for H2 2025

Looking ahead, the global LPG market remains vulnerable to several factors:

1. Crude Oil Recovery Prospects
• Any rebound in crude oil benchmarks will likely support LPG values, though volatility in geopolitical tensions and OPEC+ decisions will play a decisive role.
2. Export Competitiveness
• U.S. exporters will face increasing competition from Middle Eastern suppliers. Deep discounts are expected to continue unless Asian demand strengthens.
3. Demand from Petrochemicals
• Global petrochemical activity, particularly in PDH plants in China and Europe, will influence propane demand trends. A recovery in polymer consumption could provide some support.
4. Seasonal Shifts
• As winter approaches in the Northern Hemisphere later in 2025, heating demand may bolster LPG consumption, particularly in Europe and North America.

Final Assessment

While Q2 2025 was marked by broad-based declines in LPG prices, the second half of the year could see stabilization if crude oil benchmarks recover and seasonal demand improves. However, the overall outlook remains cautious, with oversupply and competitive pressures continuing to define global LPG trade dynamics.

 

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