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US LPG, LNG exports hit record high as US gas production booms

Highlights

US LPG, LNG exports at record high Jan-April

Arbitrage to Asia may pull more volumes East

Chinese PDH plants bolster domestic demand

  • Author
  • Cari Kiddie    Aly Blakeway    Barbara Fernandez-pita    Margaret Rogers
  • Editor
  • Karina Roman
  • Commodity
  • LNG Natural Gas NGLs Refined Products Shipping Upstream

LPG and LNG outflows from the US have hit record highs in 2024 so far as natural gas production continues to soar, while arbitrage opportunities also support export demand, sources said.

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US natural gas production has continued to ramp up, with traders still expecting the US to remain the strongest 'swing supplier' in the near term for the global LNG market.

Although the US gas rig count has fallen, production has stayed healthy. Despite rig count being lower, sources suggest that ample production is being supported by strong gas output from existing rigs.

The increased production has also provided a backbone for LNG and LPG exports.

US LPG exports have totaled 20.2 million mt in 2024 so far, between Jan. 1 to April 29, according to S&P Global Commodities at Sea shipping data.

This puts US LPG exports at an all-time high -- over the January to April period -- from 2017, when the US export data began. Comparatively, US LPG exports were at 19 million mt in 2023 and 16.6 million mt in 2022, over the same period.

The majority of US LPG production continues to point to the East, with robust Asian PDH demand pulling additional barrels into the market. However, robust production and abundant supply means there will be "more than enough" product to satisfy European demand, players added.

US swing supplier

At the same time, US LNG exports stood at 30.55 million mt in 2024 so far, between Jan. 1 to April 29, according to data from S&P Global Commodity Insights.

This puts US LNG exports at a record high -- over the January to April period -- from when the US LNG export dataset began in 2016. Comparatively, US LNG exports were at 29.46 million mt in 2023 and 28.39 million mt in 2022, over the same period.

Lower feedgas demand in the US has also helped regional natural gas storages remain at ample levels, with total deliveries to major liquefaction terminals in the US averaging around 12.19 Bcf/d during the week ended April 28, S&P Global Commodity Insights data showed.

This is well below levels witnessed at this time in 2023, which averaged around 13.89 Bcf/d during the same week.

Lower utilization levels come as Freeport LNG has been under maintenance for much of the year so far, starting with an electric motor failure affecting its Train 3 liquefaction unit during a winter storm in mid-January.

During this latest maintenance, the terminal has experienced two trips to its sole running Train 3 liquefaction unit.

In recent days, feedgas volumes to the facility have rebounded, with Freeport to receive around 830 MMcf April 29, based on nominations for the morning cycle which can later be revised.

US-Asia arbitrage

Asian demand remains at the forefront in the LPG market, with robust propane dehydrogenation plant growth igniting stronger buying appetite.

"There is a lot of production in the US, record high levels," an LPG source said. "The arbitrage to Asia is open and PDH margins are positive, there is good demand there."

Significant price differentials between the East and West have drawn more product into the Asian market. Meanwhile, supply in Europe has also remained robust despite quieter downstream demand, players added.

Platts, part of S&P Global Commodity Insights, assessed FOB US Gulf Coast propane cargoes at $449.94/mt April 26, and CIF NWE large propane cargoes at $511/mt. CFR South China propane was assessed at $624/mt April 29.

Similarly to LPG, US LNG exports look to find a home between Europe and Asia depending on where netbacks are stronger. Strong demand in Asia can help to boost LNG exports.

"Been quiet in the Atlantic, there's a lot happening in the Pacific," an LNG trader said. "[Player who are] long on cargoes want to take it to Japan and Korea hoping to get something, nothing going on in Europe."

While US exports in the first quarter were still strong, sources suggest that this may weaken slightly into Q2 as prices across Europe and Asia remain relatively depressed.

Platts assessed the Northwest European LNG marker for June at $8.914/MMBtu on April 26, while the JKM -- the benchmark price for delivering LNG cargoes to Northeast Asia -- was assessed at $10.153/MMBtu on April 26.

The US Gulf Coast LNG marker was assessed at $8.25/MMBtu on the same day.