European LPG Prices Ease Due to Poor Demand and Oversupply Situations

LPG ( Liquefied Petroleum Gas) prices in the European region are dropping on the back of the poor demand and strong supply from the US. Due to oversupply and low heating demand, propane production in the Amsterdam-Rotterdam-Antwerp region fell to a record low compared to previous years. In several countries like Germany and Netherlands, Propane is typically used for heating homes, so the unusually hotter weather conditions during this year have done little to help the inland propane market to absorb any excess supply leading to an increasing price trend of LPG in the European markets. LPG distributors anticipate that the current atmosphere temperatures and increased supply volumes from the United States will mitigate significant improvements in demand.

A surge in global LNG demand and prices in 2022 is being attributed to Russia's invasion of Ukraine and subsequent sanctions, as well as energy supply constraints in Europe and Asia. Analysts anticipate that these higher LNG costs should improve the buying appeal for NGLs like ethane and LPG that can be utilized as an alternative for LNG. Sources suggest that more LPG should be overflowing into the market as refineries begin to resume their operation in countries like Germany and France. This could further ease the prices of LPG in Europe if the demand does not improve during this month.

According to ChemAnalyst, LPG prices in the European markets are expected to ease for the rest of November due to Propane's continued strong supply rates from the US to Europe. In the case of rising demand for LPG for heating purposes on the back of changing weather conditions "as Winter is Coming," the price is unlikely to rise as the refineries in countries like Germany and France have resumed their operations activities. The resumed Inland production and strong US supply of LPG will most likely keep the cost of LPG in check for the remaining 2022, even in case of unseen demand hikes.