Unlocking Liquidity in Global LPG Markets

Virginia Bridgewater, Pricing Director at General Index, was joined by Chris Hewitt, Chief Operating Officer at Sphere. They discussed how US-China tariffs have changed liquidity, prices, and trade flows in global LPG markets. The session was recorded in mid-May 2025, shortly after the US and China agreed in Geneva to cut tariffs for 90 days.

Tariffs and Chinese propane demand

Virginia said LPG is the third-largest US export to China by revenue, worth about $11 billion a year. The US exports more than 80% of its propane, and about 20% of those exports have gone to China.

In 2018, Chinese buyers stopped importing US LPG after China imposed a 26% tariff on US propane. This time the tariffs went much higher. Chinese tariffs on US propane reached 125%, in response to US tariffs of 145% on Chinese goods. Under the Geneva agreement, those rates fell to 10% and 30% respectively for 90 days. Delivered LPG prices into Europe rose after the announcement, tracking a 3% rise in crude. Virginia said traders in Asia remained cautious until a longer-term deal is reached.

China is now much more exposed than in 2018. Its LPG imports rose from 18.4 million mt in 2017 to 35.7 million mt in 2024, and the US share of its propane imports rose from 9% in 2018 to about 50%. China has about 30 propane dehydrogenation (PDH) units with more than 20 million mt of capacity, compared with about 6 million mt in 2018. Polypropylene was already oversupplied before the tariffs, and PDH units face closure if run rates fall below 60%.

Changes in trade flows and pricing

China turned to the Middle East for supply. From April 7, propane cargoes into China were priced against the Saudi CP rather than the Far East Index (FEI), and delivered prices at Ningbo moved away from the wider Far East market. China’s demand for pure propane cargoes also widened the gap between propane and butane. By April 11, propane was $25/mt above butane, the widest gap since the first quarter of 2024. In Northwest Europe, propane prices fell sharply on the prospect of US cargoes being sent there instead.

To reflect the new flows, General Index changed how it assesses propane delivered to Ningbo. The assessment now adds freight to the FOB Middle East price instead of referencing cheaper US-origin delivered cargoes.

US prices at Mont Belvieu were volatile. Buyers rushed to book very large gas carriers (VLGCs) that could reach China before the May 13 deadline. Inventories fell and prices rose, then prices dropped once the deadline passed. Virginia said US propane has followed crude more closely during this period of uncertainty.

Other buyers took advantage of discounted US supply. More US cargoes went to Japan and to India, which imported more than 20 million mt of LPG in 2024, mostly from the Middle East. In the first ten days of May, 63,400 mt of LPG left Canada’s west coast for China, the first such shipments since 2022. Japanese buyers were reported to be selling Canadian cargoes on to China while buying US supply for themselves.

Longer term, US export capacity is still growing. Enterprise plans to add 300,000 b/d at Houston by 2026, and Energy Transfer is adding 250,000 b/d at Nederland by the end of 2025. A joint venture between MPLX and ONEOK plans new export capacity at Texas City by 2028.

What intraday data showed

Chris said most historical data in the LPG paper market covers only end-of-day prices. Sphere extracts bids, offers, and trades from voice and chat communications, which gives a view of how the market moved during the day.

After China announced 34% tariffs on April 4, the front-month FEI contract fell from about $600/mt to about $520/mt within a day. After the 84% tariff on April 9, it traded near $400/mt. On April 10 the bid-offer spread widened to as much as $15/mt intraday, as traders pulled back liquidity.

The FEI-CP spread, usually a stable contract, fell to about -$150/mt. Its bid-offer spread, normally $2 to $5/mt, widened to more than $10/mt from April 4. In May, spreads narrowed and prices began to settle, with the FEI-CP spread near -$35/mt on the morning of the webinar.

Audience questions

Chris said Sphere processes unstructured voice and chat data in the cloud, and customers decide where to store the output. The platform integrates with Symphony’s Cloud9. Brokers and traders can also submit indications of interest through the Sphere app.

Asked about General Index’s European LPG methodology, Virginia said assessments use broker data received during the trading window. The data is assessed in the same way the market already accepts.

Watch the full webinar below.