According to the latest issue of Drewry’s LPG Forecaster, global LPG trade is projected to grow by a modest 1.4% in 2025, while US LPG exports are expected to surge by 6%. This follows a 14% increase in 2024, which pushed US export terminals to operate near maximum capacity, driving up terminal fees and narrowing the US-Asia arbitrage. However, ongoing terminal expansions set to come online in the second half of 2025 will help alleviate capacity constraints.
Export Terminals Strain Under High Volumes
Drewry reports that rising US NGL production, combined with stagnant domestic demand, has contributed to higher inventory levels. Meanwhile, strong demand from PDH plants in China fueled a 13.7% increase in US LPG exports in 2024, reaching 65.7 million tonnes. As a result, US export terminals have been operating at or above capacity for the past two years, struggling to keep up with demand.
Soaring Terminal Fees Amid Limited Spare Capacity
With terminals under constant pressure, a lack of spare capacity—exacerbated by weather disruptions and maintenance delays—has driven terminal fees to record highs. In 2024, loading fees for Very Large Gas Carriers (VLGCs) at US Gulf Coast terminals peaked at $165 per tonne in September, even exceeding spot freight rates on the US-Japan route.
US-Asia Arbitrage Narrows as Costs Climb
Higher terminal fees have contributed to a narrowing US-Asia arbitrage, though fluctuations in Mt. Belvieu propane prices and VLGC spot rates have kept it volatile. For instance, Mt. Belvieu prices surged 15% month-over-month in January 2024 to $467 per tonne due to a cold snap that disrupted vessel loadings. Similarly, hurricanes and storms from May to September delayed shipments, increasing spot cargo premiums and further impacting arbitrage margins.
Despite these challenges, upcoming terminal expansions in the second half of 2025 are expected to enhance US export capacity, potentially easing congestion and stabilizing fees. However, Drewry cautions that market volatility—driven by unpredictable weather and shifting freight dynamics—will continue to shape the global LPG trade landscape in the year ahead.
