Propane industry outlook and major propane markets in 2022
We may still make accurate forecasts about how the sector will appear in the future beyond 2022. Propane has a bright future because demand will remain high and output will likely increase.
- Propane industry outlook
- What are the biggest propane markets in your region?
- What are the primary propane end-use industries on the market?
- Who are the major players in the propane industry?
Propane industry outlook
1. The propane business is likely to expand.
The propane business is expected to grow significantly beyond 2022. Through 2026, we can expect a compound annual growth rate (CAGR) of 4% or higher. Asia-Pacific will almost probably remain the world’s largest and fastest-growing market. Propane’s value as a clean, long-term alternative fuel will lead to increased local and international demand.
2. Growing demand for low-emission, long-term fuels.
Demand for sustainable fuels like propane will rise as the globe deals with a growing population, rising pollution levels, and the growing urgency of climate change. Propane is projected to become increasingly sought after, especially in nations with big populations and high pollution levels, because it emits much fewer carbon emissions than fuels like gasoline.
The Environmental Protection Agency (EPA) in the United States plans to strengthen emissions limits in 2023 and beyond. Passenger automobiles and light trucks with model years 2023 through 2026 must meet more strict standards than vehicles on the road now, with the standards becoming more stringent each year. The upgrades call for a 10% decrease in emissions in the first year, followed by a 5% reduction each year after that.
Hybrid and electric vehicles, as well as propane-powered vehicles, will almost certainly play a role in the transition to more sustainable fuels. According to the EPA, the more stringent rules will have a major impact on air pollution and carbon levels in the atmosphere. Following these standards will allow the US to avoid emitting 2.2 billion tons of greenhouse gases between 2023 and 2050.
3. Growing demand for propane as a transportation and automobile fuel.
Propane’s clean-burning qualities, as well as its relative affordability and safety, will certainly make it more popular in automotive and other transportation uses.
New propane-powered vehicles, both light- and medium-duty, have spurred an increase in demand for propane to power them in recent years. This demand is propelling the propane business forward, and it will most certainly do so in 2022.
Through 2026, passenger cars are expected to be the largest international market for propane-powered vehicles, with heavy-duty trucks seeing the highest growth.
The popularity of propane as an alternative fuel is partly due to population expansion. The global population was estimated to be 7.9 billion people in January 2022. That number is expected to climb to 8.1 billion by 2025. A growing population implies more commuters, travelers, and vehicles on the road, which means even more carbon emissions into an already filthy environment. Clean-burning propane is an excellent way to mitigate the negative effects of population increase.
See more: PROPANE PRICE FORECAST IN THE YEAR 2022
What are the biggest propane markets in your region?
In some parts of the world, demand for propane, also known as liquified propane gas (LPG), is higher than in others. The following are some of the most prominent regional markets for propane:
- Asia-Pacific: By far the largest and fastest-growing market is Asia-Pacific. It dominates global propane consumption, with China and India having the biggest demand. Japan and South Korea are two of the region’s largest propane consumers.
- The United States, Canada, and Mexico are major propane consumers in North America. Propane has applications in commercial, residential, and industrial settings. Rural areas in the United States, such as the Midwest, account for a large portion of this household use.
- Europe: Spain, Germany, Italy, France, and the United Kingdom are major propane consumers in Europe.
In the European Union (EU), propane is used for about 48 percent of domestic heating, 33 percent for road transportation, and 19 percent for industrial heat and power generation. LPG fuels 15 million vehicles and provides heat to 20 million EU citizens and 700,000 enterprises.
- Propane is a major source of energy in South America. The most important propane users are countries like Brazil and Argentina. Latin American propane producers have traditionally operated in a closed market with state-controlled prices. However, in recent years, the energy business has undergone privatization, opening the market to a flood of imports and increased price competition. The Panama Canal expansion has significantly improved the efficiency of propane imports into the region.
- Middle East: Middle Eastern countries such as Saudi Arabia are propane consumers, albeit they are better known as propane producers. Saudi Aramco has drastically boosted propane liquids output, accounting for 500 million barrels or more from 2018 onwards, after producing relatively small volumes for years — around 175 million to 195 million barrels a year through 2016.
What are the primary propane end-use industries on the market?
While propane has a wide range of applications, demand is concentrated in a few areas:
- Transportation: Propane is increasingly being used as a green, sustainable, low-emission alternative fuel source in the transportation industry. Propane is used in low-emission vehicles more than any other alternative fuel in transportation.
- Propane is a clean, long-lasting fuel for residential heating and cooking. In the United States, propane is used by around 11.8 million households, primarily in rural regions. Propane is also used to power outdoor grills in about 42 million American homes. Residential heating and cooking consumption is increasing globally. International residential consumption accounted for 44% of total propane production in 2014, while increased demand for propane in transportation has changed the equation slightly.
- Propane is also used in the business sector for heating and cooking. Restaurants frequently use propane as a cooking fuel and to heat outside areas with heat lamps. In the winter, many commercial businesses use propane as a clean fuel for heating.
- Industrial: The industrial sector uses around 12% of all propane worldwide. Almost half of the propane is used to make plastic. Propane is also used in industries like petrochemical manufacturing.
Though these are the most common propane end-use industries, the market is also significant in building, agriculture, and power generation.
Who are the major players in the propane industry?
The propane industry is dominated by a few noteworthy names, many of whom are huge oil companies that have shifted their focus to propane as the market becomes more promising. Here are some of the major players:
- Shell Royal Dutch
- Petroleum and Chemical Corporation of China
- Saudi Arabian Oil Company Gazprom (Saudi Aramco)
Major oil companies have enormous global natural gas production infrastructure and may produce significant amounts of propane for the market.
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