Overview

FGE’s annual LPG Forecast provides a comprehensive summary and assessment of the global LPG market, divided into two main geographical areas: East and West of Suez. In this year’s report, FGE examines the industry dynamics on a country, regional and global level and then derives an assessment of LPG trade and shipping balances, as well as an outlook on prices, margins and shipping rates.

Last year (2023) the most talked about topic was the red-hot VLGC market. Many factors were at play keeping freight rates far higher than most peoples expectations – stronger-than-expected US exports growth, an unexpected surge in Saudi Arabia’s LPG export in mid-2023, and the Panama Canal transit reductions in 4Q 2023.

2023 was a lengthy year for the LPG market. With firm US and Middle East export growth heaping pressure on global LPG prices. Despite the weak petrochemical environment, LPG prices during summer discounted significantly enough to push Asian petrochemical margins into the black. This resulted in waves of buying activity, translating into firm LPG import growth into China.

What will 2024 have in store?

The length in product markets will likely persist yet again, with still-strong LPG supply growth across the US and Middle East keeping global markets well supplied.

In Asia, new PDH capacities will continue to be brought online. This is not exactly great news for players along the propylene value chain. Although, with slower growth in new steam cracker capacities, we believe cracker margins may have a slightly better year in 2024.

The upcycle in US shale continues - albeit at a slower rate compared to 2022 and 2023 - with tight oil growth driving most of the incremental growth in US C3+ production. We believe North American NGLs growth will remain high in 2024, only starting to slow down from 2025 onwards.

On the green Energy Transition front, we have seen more shipowners adopting LPG as the fuel solution to future-proof their fleets. In Africa, aspirations are coming to fruition as import and storage infrastructure plans move forward. In Latin America, dreams of LPG becoming a widely adopted auto fuel have started to become a reality. 

Outlook For 2024

• An in-depth look at the potential for US upstream NGL supplies in 2024, mapped from gas plant to terminal.
• An in-depth look at Asia’s demand growth in 2024, analyzing how the rescom sector will evolve after the post-Covid demand boost wears off.
• Could petrochemical margins improve or is the industry still trapped in an olefins downcycle? We look at the wave of olefin capacity additions in Asia.
• We are projecting another potentially ‘long’ year for LPG as supply growth exceeds demand growth. 

Beyond 2024

• What will slowing US export growth and the rise of Middle Eastern supply in the mid-2020s mean for the future structure of global LPG markets?
• A long-term look at feedstock demand in Asia, the US and Europe over the next 20 years.
• What is the realistic potential of BioLPG as a fuel source over the next 20 years?
• With many new VLGC orders placed in 2023, will there be another market downcycle in the latter half of the 2020s?