Asian, Mideast demand pushing world’s LPG supplies

March 27, 2006
Global LPG demand underwent an historic shift in 2000-05 when Asian demand surpassed North American for the first time.

Global LPG demand underwent an historic shift in 2000-05 when Asian demand surpassed North American for the first time.

Asian LPG demand in 2005 reached about 66 million tonnes, while demand in North America was only about 60 million tonnes. The trend, according to Purvin & Gertz’s Ken Otto, will continue: Asian demand by 2010 will reach about 82 million tonnes, North American only about 65 million tonnes.

Otto made his remarks at the consultancy’s annual International LPG Seminar in Houston Mar. 13-16.

Drivers

World LPG demand growth overall has continued steadily since 2000, driven by expansions in Asia and the Middle East. Purvin & Gertz puts 2005 demand at about 225 million tonnes, up from about 205 million tonnes in 2000. By 2010, total worldwide LPG demand will hit about 255 million tonnes, with Asian and Middle Eastern demand providing the major pushes while North American and European demand remain relatively flat (see figure).

Otto said, however, that LPG prices, following natural gas and crude oil prices much higher, may slow this growth.

Click here to enlarge image

He also said that growth in residential-commercial, chemical, and motor-fuel sectors has driven overall demand growth since 2000. In the 5-year period, res-com demand grew by 12% to 113.2 million tonnes in 2005, while chemical demand grew by 22% to 51.2 million tonnes. In 2005, res-com demand comprised 51.5% of worldwide LPG demand. Demand in the other market sectors-refining and “Other”-shrunk in the 5-year period.

Asia leads way

Purvin & Gertz divides Asian demand into three regions: Indian Subcontinent growth in 2000-05 averaged 8.9%/year; Southeast Asia 5.8%/year; and the Far East, which includes China, 2.7%/year. Otto said that res-com demand is expanding in these East of Suez markets so rapidly that the region will surpass West of Suez markets for this demand sector before 2010.

Chemical demand for LPG in the Middle East is the other big story, he said. By 2010, the Middle East will become the “clearing house” for LPG as petrochemical feedstock, as the region surpasses Europe and becomes second (although by a great deal) only to North America.

Finally, Otto said that, as global LPG supplies increase, the price-sensitive sector of chemical demand (mostly the US and Europe) will expand.