Global LPG production and consumption continued to grow last year, according to the latest Statistical Review of Global LPG from the World Liquid Gas Association (WLGA). This came despite sluggish global economic growth, unrelenting inflation and major geopolitical crises. The US and China remained the powerhouses driving growth, while India's residential market continued to make impressive gains. Argus spoke with WLGA director David Tyler about the findings:
How did global supply and demand fare in another tumultuous year?
The data showed 2024 being another resilient year with global supply growing by 3pc to more than 370mn t. This added another 11mn t of LPG to the market, which was swallowed up largely by the chemical industry to be used as feedstock. The US produced twice as much LPG as the Middle East, at 110mn t compared with 52.5mn t, respectively, but there are signs that future growth may shift back to the Middle East with new production on stream in the coming years.
Global demand exceeded 366mn t for the first time. This is almost 100mn t more than 10 years ago. China was the standout performer — demand grew by over 6pc to more than 86mn t. US demand fell slightly but still exceeded 47mn t. India's and South Korea's demand increased by over 8pc to 33.4mn t and 11.6mn t, respectively. The big decline was in Russia, where it fell by over 10pc to 12.2mn t.
What were the main challenges the global industry faced?
The year saw several major geopolitical events that included supply disruptions and civil conflicts. Extreme weather was another challenge. The main centres of production — the US and Middle East — are far from the key demand centres of Asia, and most of the LPG traded in the world starts its journey by sea. This provides flexibility if trade routes have to be adjusted and the industry took full advantage of that when those challenges arose. The pattern of movement shifted in 2024 with US-based product finding markets in Europe and India.
Which major geopolitical event had the largest bearing on the market?
The Ukraine war disrupted trade flows in Europe given the EU's decision to place Russian LPG under sanction from December 2024. This led to countries such as Poland — whose demand rose by 1.2pc to 2.4mn t — bringing in alternative supply prior to the enforcement. Much of this has come from seaborne imports, particularly US cargoes, which are shipped by VLGCs to Sweden before being broken into smaller lots and delivered to Poland's Baltic ports. But substantial volumes have also come overland by truck and rail from northwest Europe. As a result, Russia has diverted its LPG exports to parts of Asia, including China and India.
Which countries stood out in terms of growth, and which had a difficult year?
China and India stood out with demand growth of 5.1mn t (6.3pc) and 2.8mn t (9.2pc), respectively. Saudi Arabia and South Korea were the only other countries to have demand growth above 500,000t in 2024, at 5.7pc and 9.6pc, respectively. Demand in Bangladesh continued to grow strongly, by 17pc to 1.8mn t, in 2024. But demand fell in the US and Canada, by 0.4pc and 5.1pc, respectively, while in Europe and Eurasia it dropped by just under 1pc. Asian demand rose by about 3pc but in Japan it declined by 5.8pc to 12.5mn t — 10 years ago it was 17.3mn t.
Indian demand continued to grow despite the market supposedly nearing saturation. Was this a surprise, and is there room for further growth?
It was a bit of a surprise. LPG demand in India has been growing strongly and consistently over the past decade, and the majority of the population are now using LPG. In 2024, demand was 33.4mn t, while 10 years ago it was half that. India has the highest residential demand in the world and household penetration of LPG is near 100pc, but growth has continued. The PMUY scheme expanded LPG access to rural and low-income households, adding many millions of new users. Urban penetration is high, but rural households are still shifting away from traditional fuels such as wood, charcoal and kerosene, creating continued opportunities. Some homes often use LPG and traditional fuels, so LPG demand growth can continue in the short term as fuel stacking drops off and usage intensity grows. It is expected there will eventually be pressure from the push to electrify and from decarbonisation policies.
This year's review includes 24 more African countries. What was notable among some of the new entries pushing for clean cooking transitions to LPG?
Tanzania is included for the first time, with demand of 253,000t in 2024, of which 170,000t was used in the residential sector. Tanzania is an important market to watch following the recent announcement by [trading firm] Petredec to build a new storage terminal in Tanga. Some of the other countries have very low levels of LPG per capita penetration, and for them to seriously improve, there will have to be not just supportive government policy but also investment in infrastructure, market conditions, safety and education.
Looking at Africa as a region, the Summit on Clean Cooking in Africa, held in Paris in 2024, secured $2.2bn in pledges from governments and private-sector players to combat the devastating health and environmental impacts of traditional cooking fuels. The IEA's recent Roadmap for Africa forecasts LPG demand to grow to nearly 31.5mn t/yr in sub-Saharan Africa by 2040 from 6mn t in 2024 if clean cooking access expands with sufficient investment and infrastructure.
Were there any interesting developments in terms of sectoral growth or contraction?
The review this year has split commercial from residential demand, demonstrating the importance of the commercial sector for future growth. Commercial consumption last year amounted to almost 20mn t, representing 5pc of the global total. The WLGA has recently published a new good industry practice guide that focuses on how to develop LPG demand in this vitally important sector, especially in countries where LPG is in its infancy.
School kitchens, for example, that currently use wood for cooking can create dramatic benefits from switching to LPG. Children are witnessing first-hand how the use of traditional fuels such as wood seriously impacts the health of the cooks, staff and children. Where LPG is used as an alternative, the benefits are clear to the children, who report this back to their parents, advocating for its use at home.
What was the WLGA's assessment of renewable LPG and dimethyl ether (DME) production and demand growth in 2024?
Renewable liquid gas [RLG] — LPG and DME — production capacity has been increasing steadily in recent years, to 480,000 t/yr by the end of 2024 from 300,000 t/yr in 2023. Biopropane is primarily produced as a by-product of hydrotreated vegetable oil and sustainable aviation fuel, which continue to drive growth in RLG output. But significant challenges remain.
Decarbonisation efforts are slowing in some countries owing to a backlash against the high costs of the options for mitigating climate change. Demand is still growing, just at a slightly slower pace. Production capacity is forecast to increase by another 100,000 t/yr in 2025 and 2026.
