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Asia Import Patterns Shift as US LPG Cargoes Plug Iranian Supply Gap, Vortexa Says

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US LPG exports remain robust despite shifting trade dynamics, with volumes currently at sea standing around 1.5 million metric tons above pre-conflict levels and continuing to supply global import markets, analysts at Vortexa reported on Tuesday.

Strong US exports have helped offset weaker Iranian shipments into China, while India's LPG import deficit has narrowed toward five-year seasonal lows, supported by increased long-haul cargo arrivals from the US.

The US is also strengthening its position in the global ethane market. Record-high ethane production, coupled with the startup of Phase 2 of Enterprise Products Partners' Neches River export expansion, has pushed US ethane exports to all-time highs. Flexible export capacity is increasingly being directed toward ethane rather than LPG cargoes.

In Asia, East-of-Suez naphtha exports rose nearly 50% month-on-month, driven by higher shipments from Oman and Saudi Arabia, as well as intra-Asian trade. At the same time, forward propane-to-naphtha spreads are providing less support for propane demand in Northeast Asia, although strong paper margins for propane dehydrogenation plants have helped operating rates recover.

Freight markets remain under pressure despite signs that the availability of very large gas carriers in the Middle East Gulf may reflect expectations of stronger regional employment and a possible recovery in Hormuz transit activity. Vortexa analysts said BLPG1 freight rates from the Middle East Gulf to Chiba would likely find support if traffic through the waterway increases following any breakthrough in negotiations involving Iran.

Elsewhere, Nigerian LPG exports to China have surged despite an export ban, with June shipments running at roughly four times May levels, although the analysts cautioned the increase may prove temporary.

Canadian propane exports are also on track to reach record highs, supported by rising demand from China and South Korea.

India's LPG imports have rebounded to near their five-year average, largely due to record arrivals of US-origin cargoes.

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