US LPG export growth is projected to slow to 6% in 2025, constrained by terminal capacity limitations, according to Drewry’s LPG Forecaster. This follows a 13.7% surge in 2024, reaching 65.7 million tonnes, which pushed US Gulf Coast terminals to operate near full capacity.
Limited spare capacity at these terminals, coupled with weather and maintenance delays, resulted in record-high terminal fees in 2024. Fees for loading VLGCs peaked at $165 per tonne in September, exceeding spot rates on the US-Japan route. The high terminal fees contributed to a narrowing of the US-Asia arbitrage, although low Mt. Belvieu propane prices and subdued VLGC spot rates on the US-Japan route also played a role. Mt. Belvieu prices remain susceptible to weather-related uncertainties, with a 15% month-over-month increase in January due to a cold snap.
To address the capacity constraints, several expansion projects are underway. Energy Transfer plans to add 250 kbpd of NGL export capacity at its Nederland terminal by mid-2025 and is optimizing its Marcus Hook terminal. Enterprise Products is constructing a new LPG and ethane terminal along the Neches River, with Phase 1 expected to be completed by the end of 2025 and Phase 2 by the first half of 2026. Enterprise Products also announced expansion plans for NGL export capacity at the Houston Ship Channel, scheduled to start operating by the end of 2026. ONEOK, Inc. and MPLX LP have entered into joint ventures to construct a new 400 kbpd LPG export terminal in Texas, expected to be completed by early 2028.
These expansions are projected to increase the installed LPG export capacity along the US Gulf Coast to 100 mtpa by 2029, up from the current 60 mtpa. However, full operations will take time, and export growth is expected to outpace the expansion in terminal capacities. As a result, terminal fees are expected to remain high in 2025, and tight spot cargo availability will persist in the first half of the year.
This constrained US supply is expected to worsen the vessel surplus in the VLGC market, squeezing VLGC rates. In a potential US-China tariff war scenario, China’s imports from the US, which accounted for 30% of US LPG exports in 2024, could decline in favor of Middle Eastern supplies, reducing tonne-miles demand and further impacting the vessel surplus. US exports would also be affected as they seek replacement markets.
Drewry Maritime Research is a maritime research and consulting firm providing analysis and data on the shipping industry.