U.S. propane exports have consistently increased since 2007, reaching an unprecedented average of 1.8 million barrels per day (b/d) in 2024, marking the highest levels recorded since data collection began in 1973. The growth in exports has been primarily fueled by rising demand in East Asia, particularly in China, alongside a widening price gap between U.S. propane and international benchmarks. Globally, propane is utilized in both residential and commercial applications, including space heating, and serves as an essential petrochemical feedstock for producing propylene and ethylene, which are crucial in plastic manufacturing. The surge in U.S. propane production, a byproduct of natural gas processing and crude oil refining, has significantly bolstered export capabilities, particularly as the country has ramped up natural gas output.
The resulting lower domestic propane prices compared to Asia have encouraged these record export levels. Infrastructure development has played a vital role in supporting the growing shipments. Expansion projects at U.S. propane export terminals in recent years have increased export capacity by over 700,000 b/d. By November 2024, U.S. propane exports exceeded 2 million b/d for the first time, driven by increased demand for petrochemicals and heating in Asia.
The year 2024 saw U.S. propane exports to Asia rise by 13% from the previous year, primarily benefiting Japan, South Korea, and China. Notably, U.S. exports to China surged by 40%, reflecting heightened demand, particularly for propylene, due to the construction of new propane dehydrogenation units. Despite fluctuations in trade relations, U.S. propane remained a preferred source for China, especially given the recent reductions in production output from OPEC+ countries, creating new opportunities for U.S. exporters. Meanwhile, U.S. propane exports to Europe remained stable, capitalizing on the shift away from Russian imports following the invasion of Ukraine.
In terms of pricing, the growing demand for propane as a petrochemical feedstock in Asia has led to price disparities that favor U.S. exports. The price difference between U.S. and East Asian propane reached significant levels, compelling East Asian buyers to look to the U.S. for sourcing cheaper propane. However, transportation challenges through the Panama Canal have resulted in elevated freight rates and propane prices in East Asia. Following a period of low water levels that restricted canal traffic, operations returned to normal in 2024, resulting in a significant drop in freight costs.
As a result, U.S. propane exports continue to thrive, with robust production and strategic market positioning.