> Maritime Research

In the latest issue of Drewry’s LPG Forecaster, LPG trade is projected to increase only 1.4%, while US LPG exports are likely to jump 6% in 2025. As we saw in 2024, the 14% surge in US LPG exports caused terminals to operate near their capacity, leading to a rise in terminal fees and narrowing the US-Asia arbitrage. However, terminal expansions under development will enhance the US export capacity from 2H25.

Export terminals reach full capacity amid export surge

The ongoing expansion of NGL production facilities in the US, coupled with stagnant domestic demand, pushed up inventory levels; meanwhile, robust demand from PDH plants in China resulted in high US exports in 2024, which rose 13.7% in 2024, reaching 65.7 million tonnes. These factors led to a scenario wherein terminals have been continuously operating near or above capacity for the last two years.

Figure 1: US Gulf terminals reach their capacity limit

Source: Drewry Maritime Research

Terminal fee soars as idle capacity shrinks

Overpressure at terminals created by limited spare capacity, along with weather and maintenance related delays, led to an increase in terminal fees over the year. Terminal fees for loading VLGCs at US Gulf Coast export terminals reached record highs in 2024, peaking at $165 per tonne in September. The terminal fees even surpassed the spot rates on the US-Japan route.

Figure 2: US terminal fees surged as terminals near their full capacity

Source: Drewry Maritime Research

High terminal fees reduced arbitrage

Elevated terminal fees triggered the narrowing of the US-Asia arbitrage. However, low Mt Belvieu propane prices and subdued VLGC spot rates on the benchmark US-Japan route kept the US-Asia arbitrage narrow, although volatile.

Figure 3: US-Asia arbitrage

Source: Drewry Maritime Research

Given that Mt. Belvieu prices are susceptible to weather-related uncertainties, the market remains volatile. For instance, in January, Mt. Belvieu prices jumped 15% MoM, reaching $467 per tonne due to a cold snap that disrupted vessel loadings. Additionally, the surge in spot rates driven by unstable market conditions can abruptly narrow the US-Asia arbitrage. This vulnerability to weather disruptions was evident from May to September when hurricanes and storms delayed shipments and drove spot cargo premiums higher.

Terminal expansions underway

Growing export demand and instability have driven terminals to ramp up export infrastructure and expand capacity. In response, plans are underway to add refrigerated capacity at these terminals.

Energy Transfer will add 250 kbpd of NGL export capacity at its Nederland terminal by mid-2025. This terminal will primarily export LPG and ethane, with the share of ethane gradually increasing during the forecast period. Additionally, Energy Transfer is undertaking the first phase of optimisation work to enhance its installed NGL export capacity at the Marcus Hook terminal. Although it is expected to be completed by 2H25, the exact incremental volume for LPG remains unclear.
Enterprise Product is constructing a new LPG and ethane terminal along the Neches River. Phase 1 of this project, expected to be completed by end 2025, will comprise 120 kbpd of ethane refrigeration train and 900,000 barrels refrigerated ethane tank, while phase 2 of the project, expected to be completed by 1H26, will have a flexible capacity – 180 kbpd of ethane export capacity, or 360 kbpd of LPG.
Enterprise Products has also announced expansion plans for NGL export capacity at the Houston Ship Channel, including the refrigeration infrastructure and increasing the propane and butane export capacity. The expanded facility is scheduled to start operating by end 2026.
ONEOK, Inc. and MPLX LP have entered into definitive agreements to form joint ventures to construct a new large-scale 400 kbpd LPG export terminal in Texas, along with a new 24-inch pipeline from ONEOK's Mont Belvieu storage facility to the new terminal. This project is expected to be completed by early 2028.

Figure 4: US terminals capacity expansion plans

Source: Drewry Maritime Research

This latest round of terminal expansions differs from earlier plans in two key aspects. First, there is a shift in focus towards building ethane export capacity. Second, there is an element of loading flexibility between propane, butane, and ethane. Once these expansion projects are complete, the installed LPG export capacity along the US Gulf Coast is expected to increase to 100 mtpa by 2029, up from the current 60 mtpa, accounting for both dedicated and flexible capacity.

Although these expansion projects will boost the US Gulf terminal’s capacity by the end of the year, full operations will take time. Additionally, export growth is expected to outpace the expansion in terminal capacities. Consequently, US terminals will face another year of high export burden, at least until the Nederland terminal starts operations. Terminals will need to maintain high utilisation rates to accommodate the rising exports. As a result, terminal fees are expected to remain high in 2025, and tight spot cargo availability will persist in 1H25.

This will restrain US exports and LPG supply in 1H25. However, as new terminals start operations, US LPG supply would increase.

Conclusion

The constrained US supply in 1H25 is expected to worsen the vessel surplus in the VLGC market, squeezing VLGC rates. Additional export capacity at the Nederland terminal in 2H25 can increase the vessel loadings, depending on the ramp-up period. However, in a potential US-China tariff war scenario, we foresee China’s imports from the US (which accounted for 30% of US LPG exports in 2024) to decline in favour of Middle Eastern supplies, reducing the tonne miles demand and worsening the vessel surplus. Meanwhile, US exports will be affected as they struggle to find a replacement market for China. Furthermore, the fall in trade can impact the ongoing project expansions with delays and possible cancellations of future projects.

Subscribe to our latest issue of LPG Forecaster for more insights, with a complementary access to our all-new digital research portal, Drewry OnDemand.