NGLs’ era of “peak demand growth” will come to an end by 2025, according to ESAI Energy. Between 2021 and 2025, Asia’s LPG import requirement will grow less than 100,000 b/d annually and the global market will flip back to surplus, according to ESAI Energy’s newly published Global NGL 5-Year Outlook. Developments in both China and India will slow the growth of imports to Asia’s two biggest LPG markets.
In the LPG market, fast expansion of the natural gas network in China will roll back household LPG use in that country, according to ESAI Energy. Meanwhile, higher prices and reduced subsidies have slowed growth in India. If in the period leading up to 2020 Asian demand grew by more than 100,000 b/d annually, going forward the growth rate will be half that amount.
Separately, ESAI Energy submits that demand for US ethane will decelerate after 2023 due to a relative lack of investment in new ethane crackers in the US. While 2021 is seeing a record increase in deliveries to overseas crackers, export growth will moderate. Consequently, global demand for US ethane will grow at a slowing pace.
“Demand growth for both LPG and ethane will slow,” explains ESAI Energy Principal Andrew Reed. “Given that the NGL fundamentals are usually shaped by supply, it is striking that we do not foresee a supply crunch that would price ethane or LPG out of the petrochemical feed slate. To the contrary, in a year or so we anticipate the LPG market flipping back to surplus. China is a microcosm of Asian demand growth. We think about China in bullish terms due to its climbing petrochemical demand. Due to other bearish factors, however, China may disappoint exporters.”