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US propane exports rise 13.2% year-over-year in 2017

HOUSTON, March 26, 2018 (PCW) -- US propane exports rose 105,000 b/d year-over-year in 2017 to an average of 904,250 b/d, an all-time high, EIA data shows. Much like ethane exports, Canada remains the top importer of US propane, but its market share is on the wane.

The top five importers of US propane in 2017 were: Canada (up 7,080 b/d, or 2.8%, to 256,830 b/d), Japan (up 56,600 b/d, or 37.9%, to 205,580 b/d); Mexico (up 18,830 b/d, or 16.5%, to 132,750 b/d); China (up 24,000 b/d, or 24.2%, to 123,250 b/d) and Korea (up 13,500 b/d, or 23.2%, to 71,670 b/d).

Canada’s market share of US propane exports came in at 28.4% compared with 31.3% in 2016. The drop off could be attributed to a greater reliance on domestic production, rather than US imports. Total Canadian propane inventories finished 2017 at levels below those seen in 2016 and the country’s National Energy Board has noted an increase in supplies from western Canada.

With some new petrochemicals infrastructure expected around the 2020 time frame, it is foreseeable that Canada’s reliance on US propane could fall as end-users have shown a preference for domestic supplies.

Meanwhile, Asia’s appetite for US propane appears to be quite rampant. China’s new propane dehydrogenation units relied heavily on US supplies in 2017 and, unless overtaken by a regional supply contract, the flows should continue this year.

The other main source of Asian demand is from Japan, which accounted for 22.7% of total US propane exports in 2017, compared with 18.7% in 2016. Half of Japan’s propane demand comes from household uses, namely cooking and home heating, with the other half going into industrial uses. What could propel exports to new highs in 2018 is increased LPG cracking demand in Asia. Steam crackers, especially in China and South Korea, are retrofitting their facilities in order to consume more LPG in their feed slate, rather than naphtha.

The changes are fairly modest, about 5-15% LPG with the remainder being naphtha, but represent a sea change for the Asian petrochemical industry, which runs at an overall feed slate of more than 70% naphtha on average. With China already being net short propane, it is foreseeable that the country’s liftings should increase in 2018. -- Samantha Hartke

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