Purvin & Gertz: Asia dominates world LPG demand growth

March 11, 2004
Asia surpassed North America in 2003 as the world's largest market for internationally traded LPG, according to figures compiled by industry consultant Purvin & Gertz Inc., Houston.

Warren True
Chief Technology Editor—Pipelines/Gas Processing

THE WOODLANDS, Tex., Mar. 11 -- Asia surpassed North America in 2003 as the world's largest market for internationally traded LPG, according to figures compiled by industry consultant Purvin & Gertz Inc., Houston, and reported Wednesday by S. Craig Whitley, senior principal for the firm, at its annual International LPG Seminar in the Woodlands, near Houston.

Despite the continued predominance of world demand in economies west of the Suez Canal ("West of Suez"), growth there has been far outstripped by demand East of Suez, said Whitley. And among demand sectors, residential and commercial ("resid/com") demand has far outstripped the next sector's growth, chemical demand.

And LPG supply growth since 1990 from Middle East production has far outstripped growth in other geographic regions and the world total growth rate.

A sprint
In the 13 years Purvin & Gertz has been tracking LPG demand, Asian demand moved to more than 61 million tonnes last year from third place in 1990 with demand of about 30 million tonnes. In such demand growth, the region sprinted past Europe whose LPG demand in 2003 of about 33 million tonnes was only slightly ahead of its 32 million tonnes in 1990.

North American LPG demand increased to about 57 million tonnes last year over its 1990 demand of about 46 million tonnes. Latin American demand continued to hold onto fourth place in world trade, about 27 million tonnes in 2003 compared with about 17 million tonnes in 1990.

Since 1990, demand East of Suez has grown at 9%/year, whereas West of Suez demand has grown at only 2.1% and total world demand has grown by 3.9%/year. East of Suez consists of Oceania, Middle East, the Indian subcontinent, Southeast Asia, and the Far East.

Total current LPG demand, however, continues to reflect the dominance of economies in Western Europe and North America. West of Suez demand is 127 million tonnes/year (tpy), while demand East of Suez is 80 million tpy.

East of Suez demand, however, with its Asian components, has been growing much more rapidly. In 1990, it was about 35 million tonnes and Purvin & Gertz has forecast that demand will reach more than 100 million tpy in 2010, with the Far East including China reaching nearly half that from about 25 million tonnes in 1990.

LPG demand West of Suez will continue to expand but far more slowly, to more than 140 million tonnes by 2010.

Sectors; supply
Demand in the resid/com sectors has driven these growth rates, reaching 109.2 million tonnes in 2003 from 64.4 million tonnes in 1990. The nearest sector is chemical demand, reaching 40.3 million tonnes in 2003 from 20.3 million tonnes in 1990.

Once again, growth in Asia is behind this trend. Resid/com demand there reached more than 40 million tonnes in 2003, from slightly less than 15 million tonnes in 1990. Growth in this sector was also strong, but less so, in Latin America, reaching more than 22 million tonnes in 2003 compared with 15 million tonnes in 1990.

In Europe and the economies of the former Soviet Union, resid/com demand actually declined slightly over the 13-year period.

Purvin & Gertz forecast that global resid/com use of LPG will more than double by 2010 to about 136 million tonnes from about 63 million tonnes in 1990 with the greater part of this growth taking place West of Suez, however.

At the same time, worldwide demand for LPG as chemical plant feedstock grew in North America to more than 24 million tonnes last year, from slightly more than 15 million tonnes in 1990. And in the Middle East, which has been experiencing rapid expansion of is petrochemical industry, LPG demand as chemical plant feedstock was essentially nonexistent in 1990; in 2003, it reached nearly 8 million tonnes.

This East of Suez use of LPG, however, will remain dwarfed by such demand West of Suez: In 2003, West of Suez demand reached about 32 million tonnes, while East of Suez demand was about 12 million tonnes. By 2010, Purvin & Gertz forecast, West of Suez chemical demand for LPG will reach about 42 million tonnes, while East of Suez will only grow to about 15 million tonnes.

Supplies of LPG from the Middle East and Asia have grown rapidly, said Whitley, with the two regions making up about 67 million tonnes last year; North America contributed about 57 million tonnes. In 1990, Middle East supplies of LPG were about 23 million tonnes, Asia's about 12 million tonnes, and North America's about 46 million tonnes.

But in the 2003-05 period, Middle East supplies will grown at nearly 8%/year, while overall world growth will reach only about 4.5%/year.

The Middle East continues to dominate world trade in LPG, exporting nearly 20 million tonnes in 2003. Purvin & Gertz forecast the region's exports will grow only slightly by 2005 but still retain more than 30% of world trade. But in the 5 years following 2005, Middle East exports will rise to about 28 million tonnes by 2010 with Saudi Arabia and the UAE making up the lion's share of these volumes.

African LPG exports through 2010 look to expand to nearly 15 million tonnes from less than 11 million tonnes last year and barely 4 million tonnes in 1990.

Contact Warren True at [email protected].