US-China tensions reshape global LPG trade flows

According to media reports, the global liquefied petroleum gas (LPG) market is undergoing a major shift as Chinese tariffs on US imports force buyers to seek alternative supplies from the Middle East, while American cargoes are redirected to Europe and other parts of Asia. This realignment is expected to weigh on LPG prices, hurt US shale producers, and increase feedstock costs for Chinese petrochemical firms that have relied on low-cost American supply.

China, which purchased a record 550,000 barrels/day of US propane in 2024—making up 60% of its total imports—is rushing to replace American volumes ahead of the new tariffs taking effect on May 14. With limited global capacity to absorb the displaced volumes, analysts expect US LPG exports to China could drop by 200,000 barrels/day over the next six to nine months. In response, Japan, India, and other Asian buyers are taking advantage of the cheaper US product, while China’s demand is expected to shift towards naphtha as an alternative.

The rerouting of LPG cargoes has pushed up Middle Eastern supply premiums to China to as much as $60/ton, double pre-trade-war levels. Chinese buyers are attempting swaps with other countries, though the costs of these deals remain high. Analysts expect China’s LPG demand could fall by 150,000 barrels/day in H2 2025, with a 140,000 barrels/day increase in naphtha use, though this won’t fully offset the loss of 1.5 million tons/month in US supply.

Meanwhile, China could exempt US imports of ethane and liquefied petroleum gas (LPG) from tariffs if trade talks between the two countries prove successful, confirming the earlier market reports about a possible exemption Chinese producers were seeking.