News
03/11/26
Q&A: Trade shocks test LPG in 2025 but growth endures
London, 3 November (Argus) — Given the geopolitical upheaval and LPG supply
crisis of 2026, it would be easy to forget how disruptive 2025 was for the
global LPG industry, as tariffs, sanctions and uncertainty upended established
trade patterns. Yet global LPG supply still rose by 2.7pc on the year to about
380mn t and demand grew by 1.2pc to 374mn t in 2025, according to the
Statistical Review of Global LPG published by Argus on behalf of the World
Liquid Gas Association (WLGA) last month. Argus spoke with WLGA director David
Tyler about the key trends that emerged from the 2025 data: What is your
assessment of the market's performance in 2025? The industry demonstrated
remarkable resilience and adaptability. Global LPG supply increased, supported
by the development of new markets and evolving trade routes, while demand also
rose, although growth remained uneven across regions and end-use sectors. The US
continued to drive global supply growth, underpinned by strong NGL [natural gas
liquids] production from shale developments. Additional supplies emerged from
other regions, notably Argentina, further diversifying the global supply base.
Looking ahead, the industry's long-term success will depend not only on
maintaining reliable and competitive supplies, but also on its ability to
navigate shifting trade patterns, respond to changing market dynamics and unlock
new opportunities for growth. Above all, ensuring that LPG remains safe,
affordable and accessible will be essential. How much of an impact did Chinese
tariffs have on US LPG in 2025? They significantly disrupted one of the world's
most important LPG trading relationships. Chinese importers had to look for
alternative supplies, particularly from the Middle East, while US exporters
redirected cargoes to other markets in Asia and beyond. This reshuffling
demonstrated the flexibility and resilience of the global LPG market, although
it also introduced additional logistical complexity, higher freight costs and
greater price volatility. The impact was particularly felt by China's PDH
[propane dehydrogenation] sector, as operators depend on competitively priced
propane feedstock, placing further pressure on a sector already facing
challenging economic conditions. US LPG production grew strongly again last
year. What challenges and opportunities does that create for US exporters? US
output rose by 6.5pc to 118mn t — almost equivalent to the global chemical
sector's demand in 2025. This reinforces the US' position as the world's leading
LPG exporter and increases the importance of securing reliable international
markets for expanding supplies. The challenge for US exporters is to navigate an
increasingly complex trading environment. But this disruption has created
opportunities to diversify export destinations. Redirecting US cargoes to India,
southeast Asia and Europe demonstrates this adaptability, while further
investment in export capacity provides more flexibility. This year's events
further highlight these opportunities. Success for US exporters will depend on
developing broader, more resilient networks while remaining competitive in
price-sensitive markets. Argentina's LPG output also grew strongly in 2025.
Could it emerge as a major supplier in the coming years? Argentina's production
increased by 9.3pc to 3.3mn t, highlighting the country's growing potential as
an international supplier. Production remains modest compared with the US but
Argentina is well positioned to serve neighbouring Latin American markets that
depend on imports, while progressively shipping more LPG elsewhere. Development
of Argentina's upstream resources, particularly Vaca Muerta, offers significant
opportunities to further increase LPG output. But realising this potential will
require sustained investment in gas processing, fractionation, storage,
transportation and export infrastructure. Argentina will also face strong
competition from established exporters, particularly the US, making reliability,
logistics and price competitiveness critical to its success. What drove
sub-Saharan Africa's 2025 demand growth and how can this growth be sustained?
The latest statistical review includes data from more than 50 African countries.
Total African LPG demand reached 18.3mn t in 2025, a rise of 3.6pc, and
sub-Saharan African growth stood at 12pc to a record 6.8mn t. Despite this
encouraging performance, consumption is relatively modest considering about
three-quarters of Africa's population live in sub-Saharan Africa. One of the
greatest challenges is urging households to transition from traditional cooking
fuels to LPG. Consumer education, particularly around the safe handling and use
of LPG, is essential. South Africa, Tanzania, Ghana, Kenya and the Ivory Coast
illustrate the region's market potential, although progress remains uneven.
Sustaining growth requires affordable LPG, reliable supply chains, investment in
import and storage infrastructure, safe and effective cylinder distribution
networks and robust safety standards and regulations. Above all, supportive
government policies will be critical in unlocking clean cooking solutions to
millions more households. India remained a major driver of demand growth last
year. Does the Mideast Gulf supply crisis put this at risk? India's consumption
increased by almost 7pc to 35.7mn t, reflecting its sustained commitment to
improving access to cleaner cooking fuels. The long-term outlook remains
positive, supported by population growth, urbanisation, rising household incomes
and government initiatives to promote safe LPG adoption, particularly among
lower-income households. But disruption to LPG shipments along the strait of
Hormuz has exposed India's vulnerability to concentrated import sources and
limited strategic storage capacity, reinforcing the importance of energy
security. Future growth will require greater diversification of supply sources,
investment in import terminals and storage infrastructure and more resilient
distribution networks. Equally important will be maintaining LPG affordability.
How successful was Europe in adapting to its first full year without Russian
propane and propane-butane mix? Europe's rapid adjustment to restrictions on
Russian LPG imports provided one of the clearest demonstrations of the
industry's resilience. The transition was particularly significant for Poland —
historically one of Europe's largest importers of Russian LPG. Despite the
disruption, Polish LPG demand increased to 2.45mn t, supported by alternative
supplies from Sweden, Norway, the US and other European markets. This remarkable
adjustment required significant changes to shipping arrangements, terminal
operations and inland distribution networks. While this involved additional
logistical complexity and higher costs, it demonstrated the flexibility and
strength of regional supply infrastructure and distribution networks. China's
PDH sector faced continued headwinds in 2025. What does this mean for future
global demand growth? China's PDH sector has been one of the principal drivers
of global LPG demand growth over the past decade. Demand from the Chinese
petrochemical sector has risen to 34.8mn t in 2025 from just over 5mn t in 2015.
But substantial investment in new Chinese PDH facilities has created excess
capacity, placing growing pressure on operating margins and plant utilisation,
introducing more uncertainty to the outlook. PDH capacity may continue to expand
in the country but consumption is likely to increasingly depend on plant
operating rates, polypropylene demand, propane feedstock prices and competition
from alternative technologies. The tariff dispute with the US and subsequent
geopolitical disruption have further exposed the sector's vulnerability to
feedstock availability and cost. As a result, future Chinese LPG demand growth
may prove considerably less predictable than planned petrochemical capacity
additions suggest. The LPG industry has an important opportunity to diversify
demand beyond petrochemicals, with more than 2bn people worldwide relying on
traditional fuels for cooking. Expanding LPG access, particularly in emerging
economies, would not only create more sustainable markets but also improve
access to clean cooking. What was the most surprising or overlooked trend to
emerge from the data? Perhaps the most striking observation is the contrast
between the enormous volumes of LPG consumed by the petrochemical sector and the
relatively modest quantities required to transform the lives of millions of
households. Global LPG supplies rose by about 10mn t in 2025 alone. That
additional volume illustrates the scale of the opportunity to expand clean
cooking access to LPG across sub-Saharan Africa. So the challenge for the LPG
industry is not simply to produce more LPG, but to ensure that more people can
benefit from it, as expanding access to cleaner cooking can transform the
quality of life for generations to come. Send comments and request more
information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All
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