LPG: View of the markets - December 2025 edition
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Asian propane prices rose 5.5pc on heating demand, with December cash differentials flipping to a $12/t premium and January cargoes fetching $28–30/t premiums. Propane’s rally narrowed discounts to naphtha, curbing cracker demand. Saudi Aramco lifted December CPs to $495/t (propane) and $485/t (butane), supported by strong India and China buying. Chinese PDH run rates held at 68pc despite weak margins. In Europe, ARA propane surged $60/t to $479/t, driving record US imports. US Mont Belvieu propane stayed range-bound near 66¢/USG, inventories 16pc above average. Outlook: winter demand supports prices, but fundamentals and logistics keep LPG muted versus naphtha.
Asia-Pacific
Global Propane Prices
- Delivered Japan propane prices in November recorded a monthly gain of 5.5pc, driven by a late-month rally spurred by heating demand.
- Tight supply for December shipments sent propane cash differentials soaring from -$8/t against the December Argus Far East Index (AFEI) to a premium of $12/t.
- The lack of prompt supply to meet winter heating needs pushed buyers to secure January shipments at $28–30/t premiums against the January AFEI.
LPG versus Naphtha
- The sharp rally narrowed propane and butane’s discounts to naphtha, reducing demand from the cracking pool owing to unattractive feedstock-switching economics.
- Front-month propane swaps averaged a $64/t discount to naphtha in November, compared with $78/t the previous month.
Saudi Aramco Posted Propane & Butane CP
- Saudi Arabia’s state-controlled Saudi Aramco raised December Contract Prices (CP) for propane and butane to $495/t and $485/t, respectively—up by $20/t and $25/t from the previous month.
- Strong demand from India and China for evenly split ratio cargoes supported the monthly hike. Spot FOB premiums for December-loading cargoes from the Middle East rose to $35/t against the December CP after buyers paid above netback to delivered prices in a bid to secure supplies.
Chinese PDH Performance
- Run rates at Chinese PDH plants held steady at 68pc at the end of November, despite negative production margins following propane’s rally.
- Some units may extend maintenance periods from late November to mid-December as downstream Chinese polypropylene futures continued to fall.
Europe
The large cargo propane cif Amsterdam-Rotterdam-Antwerp (ARA) price rose by nearly $60/t to $479/t by the end of November from $419.50/t at the beginning of the month, as spot market activity picked up and lent support to values.
Meanwhile, the physical premium to front-month cif ARA paper jumped to a high of $16.50/t from a negative -$2/t over the same period.
The stronger European lighter grade market attracted a much larger volume of US LPG. With November imports of US product totalling 785,000t, the most since March 2025 and the third-highest on records that go back to 2014.This was more than 30pc above October and 150,000-200,000t above recent monthly averages.
November imports were 70pc higher on the year, underscoring that the surge reflects not only seasonal demand but also the lingering effects of the US-China tariff disputes, which disrupted eastbound flows and left ample US supply available for Europe.
North America
The discount for propane in the Enterprise storage cavern at Mont Belvieu widened to 7.5¢/USG below LST propane by the end of November as recent export expansions at Nederland, Texas, tightened supplies in the LST storage facility. The wide differential between the two locations caused consternation among traders, who tend to hedge physical EPC volumes using LST paper.
US propane inventories ended November up 16pc versus the five-year average, according to the US Energy Information Administration (EIA). At this rate, it’s unlikely exports will manage to whittle away the stock overhang this winter, especially as one of the Houston export terminals sees upcoming maintenance in December that will likely limit incremental loadings into the international market.
Mont Belvieu butane prices remained well below year-ago levels in November, averaging 86.29¢/USG ($390.89/t) down versus 119.95¢/USG ($543.37/t) last year, as US gasoline is oversupplied and prices are weak.
Outlook
The quarter ahead
- The arrival of colder weather has finally prompted LPG prices upwards
- But weak overall fundamentals and continued logistical disruption are keeping prices muted compared with seasonal norms
- We expect the AFEI to hold around 90-95pc of naphtha for the remainder of winter
The next 6 months and longer term
- Stronger crude and naphtha prices towards the end of 2026 will boost LPG
- Growing Mideast production and muted Asia demand increases will keep LPG weak relative to naphtha
- VLGC freight rates are expected to weaken over 2026, narrowing regional spreads
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