Declining demand for LPG in Europe

Despite an abundant supply of LPG, market trends in Europe are giving rise to many uncertainties, following two winters of low demand.
Baisse demande GPL Europe

Partagez:

The liquefied petroleum gas (LPG) market remains plagued by double uncertainty, after a relatively quiet heating season. On the one hand, price fluctuations in the natural gas and LNG markets. On the other, potential variations in demand in the Asian petrochemical sector. This follows two consecutive winters of weak heating demand, despite an abundant supply of LPG, mainly from US exports and refinery production. This abundance, combined with sluggish demand, exerted little pressure on prices. It has maintained them at a moderate level compared with previous years, according to data provided by Platts, a division of S&P Global Commodity Insights.

CIF NWE propane cargoes were valued at $551.75/mt on March 7, down $3.50/mt on the day but up $6.50/mt on the week. This price level, although up slightly over the week, remains below the peaks reached in February. It is also well below the September peak, marking the start of the heating season. This situation reflects the volatility of the market, influenced not only by seasonal demand but also by changes in the global geopolitical and economic context.

The focus is now on the future, with particular concern about the potential increase in demand for petrochemicals in Asia and turbulence in gas markets, which could reduce supply in Europe. The expansion of propane dehydrogenation facilities in Asia could, in the event of stronger demand, direct LPG flows from the United States eastwards, exacerbating pressure on European supply. “Persistent weakness in global petrochemical demand is a cause for concern,” commented S&P Global analysts. However, low LPG prices in the USA could exacerbate the competition, in the face of equally low naphtha and ethane values on both the US and world olefins markets.

Market Challenges and Medium-Term Outlook

The future of the petrochemical industry remains unclear, with few expectations of improved margins for the rest of the year. The outlook brightened slightly in Europe at the end of February, mainly for naphtha, but demand for LPG remains marginal. This complex dynamic raises questions about the future balance between supply and demand, with uncertainties linked to climatic conditions and changes in global energy markets.

Faced with these challenges, the LPG market is adjusting, with increased vigilance over the coming heating seasons. Market players are concerned about the possibility of rising demand in Asia and increased volatility in natural gas prices. The latter are preparing adaptive strategies, scrutinizing US supply and European storage and regasification capacities.

Energy Transfer strengthens its partnership with Chevron by increasing their liquefied natural gas supply agreement by 50% from the upcoming Lake Charles LNG export terminal, strategically aiming for long-term supply security.
Woodside finalises the divestment of a 40% stake in the Louisiana LNG project to Stonepeak, injecting $5.7 billion to accelerate developments and optimise financial returns ahead of first gas delivery scheduled in 2026.
Keranic Industrial Gas seals a sixty-day exclusivity deal to buy Royal Helium’s key assets, raise CAD9.5mn ($7.0mn) and bring Alberta’s Steveville plant back online in under fifteen weeks.
The Irish-Portuguese company Fusion Fuel strengthens its footprint in the United Arab Emirates as subsidiary Al Shola Gas adds AED4.4 mn ($1.2 mn) in new engineering contracts, consolidating an already robust 2025 order book.
Cheniere Energy validates major investment to expand Corpus Christi terminal, adding two liquefaction units to increase its liquefied natural gas export capacity by 2029, responding to recent international agreements.
A study by the International Energy Agency reveals that global emissions from liquefied natural gas could be significantly reduced using current technologies.
Europe is injecting natural gas into underground storage facilities at a three-year high, even as reserves remain below historical averages, prompting maximized imports of liquefied natural gas (LNG).
South Korea abandons plans to lower electricity rates this summer, fearing disruptions in liquefied natural gas supply due to escalating geopolitical tensions in the Middle East, despite recent declines in fuel import costs.
Russia positions itself to supply liquefied natural gas to Mexico and considers expanded technological sharing in the energy sector, according to Russian Energy Minister Sergey Tsivilyov.
Israel has partially resumed its natural gas exports to Egypt and Jordan following a week-long halt due to the closure of two major offshore gas fields, Leviathan and Karish.
Nepal reveals a significant potential reserve of methane in the west of the country, following exploratory drilling conducted with technical support from China, opening new economic prospects.
Belgrade is currently finalising a new gas contract with Russia, promising Europe's lowest tariff, according to Srbijagas General Director Dusan Bajatovic, despite Europe's aim to eliminate Russian imports by 2027.
TotalEnergies and QatarEnergy have won the Ahara exploration licence, marking a new stage in their partnership with SONATRACH on a vast area located between Berkine and Illizi.
After four years of interruption due to regional insecurity, TotalEnergies announces the upcoming resumption of its liquefied natural gas project in Mozambique, representing a $20bn investment.
The French group has acquired from PETRONAS stakes in several licences covering more than 100,000 km² off Malaysia and Indonesia, consolidating its Asian presence and its exposure to the liquefied natural gas market.
In response to rising summer electricity consumption, Egypt signs import agreements covering 290 shipments of liquefied natural gas, involving major international firms, with financial terms adjusted to the country’s economic constraints.
Egyptian fertilizer producers suspended their activities due to reduced imports of Israeli gas, following recent production halts at Israel's Leviathan and Karish gas fields after Israeli strikes in Iran.
A report identifies 130 gas power plant projects in Texas that could raise emissions to 115 million tonnes per year, despite analysts forecasting limited short-term realisation.
Japanese giant JERA will significantly increase its reliance on US liquefied natural gas through major new contracts, reaching 30% of its supplies within roughly ten years.
Sustained growth in U.S. liquefied natural gas exports is leading to significant price increases projected for 2025 and 2026, as supply struggles to keep pace with steadily rising demand, according to recent forecasts.