India and China Increase LPG Imports from US Amid West Asia Supply Disruption

India and China, the largest importers of liquefied petroleum gas (LPG) in Asia, are significantly increasing their imports from the United States, as per Reuters report.  

This shift comes in response to a substantial drop in LPG exports from West Asia, following geopolitical tensions that have affected the region's supply chain. 

US LPG Exports Surge to Meet Asian Demand 

In April, US LPG exports are anticipated to reach a record 2.7 million barrels per day (bpd), with approximately 1.8 million bpd destined for Asia.  

This marks a 14% increase from March, as reported by analytics firm Kpler. The rise in US exports aims to fill the gap left by West Asia, which has seen its LPG exports plummet by 73% to 4,19,000 bpd in March. 

Impact on Asian Markets 

The disruption in West Asian supplies has led to increased spot premiums for propane and butane, with prices reaching $250 per metric ton above the March Saudi contract price swaps.  

Saudi Aramco has responded by raising its April official selling prices, with propane and butane prices increasing to $750 and $800 per ton, respectively. 

Read More: Hormuz Crisis Pushes India to Tap Thar Desert Oil: Can Rajasthan Reduce Import Dependence? 

Challenges in Replacing West Asian Supplies 

While the US is ramping up exports, it cannot fully replace West Asian supplies. Export terminals in the US were already operating near capacity before the conflict.  

Additionally, the longer transit times from the US Gulf Coast to Asia, taking over 30 days, add to the supply challenges. In contrast, shipments from West Asia typically take about 2 weeks. 

Demand and Supply Adjustments 

The supply shortage has led to demand destruction, with consultancy Rystad Energy estimating a loss of 1,35,000 bpd in March from regional steam crackers.  

In China, propane dehydrogenation plants are expected to reduce operations further due to feedstock shortages. India's LPG demand also dropped by 2,05,000 bpd in March. 

Conclusion 

The geopolitical tensions in West Asia have significantly impacted LPG supplies, prompting India and China to turn to the US for alternative sources. While US exports are increasing, the challenges of capacity and longer transit times remain. The situation has led to increased costs and supply adjustments in Asian markets. 

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