US propane surplus sinks Mont Belvieu paper benchmarks to $64/tonne on April 11 from $85/tonne on April 1; South Korea and Japan CFR propane falls 26% to $467/tonne as US volumes were rerouted, while Middle Eastern cargoes pivot toward China

May 2, 2025 (ICIS Chemical Business (CBNB Abstracts)) –

The US-China tariff quarrel has severely disturbed established world energy trade flows. The sudden suspension of US liquid petroleum gas (LPG) exports to China , a crucial trade route, has led to a sharp decline in propane costs across South Korea and Japan . In early Apr 2025 , the US-China trade concern escalated. The US increased tariffs to 145% on Chinese goods while China responded with tariffs of 125% on US imports. LPG, where China depends mainly on US supply, was one of the first products to be affected. In 2024, China's LPG imports from the US were roughly 18 M tonnes, more than 50% of its overall LPG imports, based on the ICIS Supply and Demand Database. Especially for propane, dependence on US cargoes surpassed 59%. With excessively high tariffs successfully cutting off direct access to its largest downstream market, the US immediately faced a local surplus of LPG. This oversupply pressured Mont Belvieu paper benchmarks distinctly lower. As disclosed by ICIS sources, on 1 Apr 2025 - the day before the US declared its reciprocal tariffs - the May 2025 MB propane paper deal reached $85 /tonne. By 11 Apr 2025 , the contract had plummeted to $64 /tonne, marking an almost 25% fall in 10 days. After the sudden loss of China's demand, US suppliers were forced to divert huge volumes of propane to alternative markets like South Korea and Japan , causing more downward pressure on regional spot costs. According to ICIS sources, cost & freight (CFR) propane values for South Korea and Japan reached $629 /tonne but declined sharply to $467 /tonne by 11 Apr 2025 - down 26% over the period. Although values rebounded partly in the days that followed, they are still substantially below pre-tariff levels. Looking ahead, with absent Chinese demand, propane MB costs would still be under heavy pressure. At the same time, Middle Eastern cargoes would shift more aggressively toward China to fill the gap in supply left by the US, possibly boosting the region's dependence on Middle East -based pricing structures. Original Source: ICIS Chemical Business, http://www.icis.com/.