China's demand-led growth helped drive the global LPG market last year, but overall expansion slowed
The latest global LPG statistics from the World Liquid Gas Association (WLGA) are out, and they show that the market continued steadfastly on its upward trajectory in 2024 in spite of geopolitical and economic headwinds. But what on the surface was a stable 2024 hides an LPG market in flux in the first year marking the end of the post-Covid bounce, as growth begun to slow.
Global LPG supply increased by 11mn t, or 3.1pc, to 370mn t last year, while global demand grew by 10mn t, or 2.8pc, to 366mn t, according to the latest Statistical Review of Global LPG — prepared by Argus on behalf of the WLGA. The growth was impressive given the fallout from the conflicts taking place in Ukraine and the Middle East, restrictions at the Panama Canal and still-struggling economies tackling stubborn post-Covid inflation. But it did mark a slowdown in the expansion since the pandemic slammed on the breaks in 2020.
The big story from 2024 was demand-led — another jump in China's propane dehydrogenation (PDH) capacity and propane feedstock use, absorbing still-swelling US propane supplies. China started up 4.1mn t/yr of PDH production capacity in 2024, representing just under 5mn t/yr of new propane demand, but utilisation remained lower than in previous years after propylene production margins failed to improve. This helped lift the country's petrochemical sector demand for LPG up by 7.4mn t, representing 74pc of total global growth. This again raises the question of how long China's PDH expansion can realistically continue for, as excess capacity, weak economic fundamentals and the disruption and uncertainty stemming from US-China trade tariffs have weighed on the market this year.
Another important development was India's household use of LPG rising again, making it the world's largest residential market ahead of China for the first time. The successes of the government's PMUY subsidy scheme has been parsed numerous times in LPG World. The assumption was that the rapid gains made since its launch in 2016 would start to slow with market penetration nearing saturation. But consumption rose by 9.2pc to 33.4mn t, with residential use up by 7pc to 27.8mn t.
Not stacking up
This gain is partly explained by households using more LPG rather than making new connections — helped by attractive pricing. Having the necessary LPG equipment and local suppliers does not necessarily lead to greater consumption. Low-income rural areas in particular often turn to cheaper and more harmful traditional fuels. The PMUY scheme has undoubtedly been successful in spreading clean cooking use across the country, and last year's growth was encouraging, but this problem has yet to be fully eradicated, hinting at the potential for future growth — at least until piped natural gas eats further into urban use.
The clean cooking agenda comes into clearer view in the latest statistics through the addition of 24 sub-Saharan African countries. Many of these are starting to turn to LPG, demonstrating abrupt growth. Burkina Faso's demand grew by 38pc to 170,000t, Somalia's more than doubled to 38,000t and Togo's increased from practically nothing to 11,000t. This region is expected to be home to a significant proportion of future demand growth, making these inclusions illuminating.
Renewable LPG production also continued to climb last year, but it is still being overshadowed by bigger biofuels stories. Capacity rose to 480,000 t/yr from 300,000 t/yr in 2023, after Irish demand doubled and the first bioLPG sales took place in Brazil. The European industry continues to be a torch bearer for the push to decarbonise heating with renewable liquid gases despite recent setbacks, including the shelving of plans for renewable DME (rDME) plants in northeast England. But a strong hook emerged on the waste-to-LPG potential of rDME, which could help get UK and European production off the ground in future years.
