Propane Market

Propane Market Outlook (2023 to 2033)

The global propane market is valued at US$ 92.3 billion in 2023 and is forecasted to reach US$ 156 billion by 2033, expanding at a CAGR of 5.3% over the decade.

Propane is a form of liquid petroleum gas that is compressed and stored. It lacks both odor and color. Although it is initially odorless, a deliberate distinct smell is added to aid in detecting leaks or escapes from pressurized tanks. Propane is derived from the production of crude oil, natural gas, and petroleum, and it shares connections with other hydrocarbon gases such as butane, propylene, isobutylene, butadiene, and butylene.

Supply of propane comes from natural gas processing plants, crude oil refining, and imports. Demand for propane is driven by residential and commercial heating, industrial applications, agricultural uses, transportation, and petrochemical production. Propane is commonly used as a heating fuel in residential and commercial settings, particularly in areas where natural gas infrastructure is limited. Demand for propane tends to increase during the colder months when heating requirements are higher.

Propane sultone is utilized in various industrial processes, such as metal cutting, soldering, brazing, and drying, and as a fuel source for forklifts and other equipment. Industrial demand for propane can be influenced by economic factors and industrial activity levels. It can be used as an alternative fuel in vehicles, particularly in areas with an established infrastructure for propane autogas. Adoption of propane as a transportation fuel depends on factors such as fuel availability, vehicle conversion costs, and government incentives.

Propane is used in agricultural applications, including crop drying, greenhouse heating, and pest control. Demand for propane in the agriculture sector can be influenced by factors such as crop yields, weather conditions, and farm economics.

• In 2021, AmeriGas debuted a new series of propane-powered generators for personal and commercial use. These types of generators have been developed for use in areas with regular power outages and have been optimized for energy efficiency and ease of usage.
• In 2021, CHS Inc. developed a new line of propane-powered irrigation engines for use in the agricultural industry. These engines are intended to reduce emissions and enhance energy economy while also delivering reliable power for irrigation systems.

Report Attributes	Details
Propane Market Size (2022)	US$ 87.58 Billion
Estimated Market Value (2023)	US$ 92.3 Billion
Forecasted Market Value (2033)	US$ 156 Billion
Global Market Growth Rate (2023 to 2033)	5.3% CAGR
Key Companies Profiled	Gazprom Shell PLC Saudi Aramco ExxonMobil Corporation Petrobras LUKOIL Abu Dhabi National Oil Company Petroliam Nasional Berhad P.T. Pertamina Gas

What are the Major Trends Shaping the Propane Market?

“Growing Emphasis of Manufacturers on Sustainable Manufacturing Practices to Reduce Environmental Effect”

Increasing environmental concerns have sparked the development of several sustainable technologies that utilize bio-based raw materials in manufacturing. Implementation of innovative sustainable technology has the potential to overcome the restrictive measures imposed by government and federal regulations that aim to limit the use of non-renewable resources in conventional processing.

Most manufacturers are focused on sustainable manufacturing practices and attempting to boost efficiency, conserve natural resources, and optimally utilize available resources. These activities are further likely to boost market growth over the projection period.

Increasing population accompanied by swift industrialization in emerging economies has also encouraged federal governments to raise production spending to satisfy the rising demand. Adoption of propane as a fuel source is rising in not only developed countries but also developing countries.

“Government Initiatives Promoting Clean Energy Transition for Sustainable Infrastructure Development”

Propane is utilized in agriculture for various applications, including crop drying, greenhouse heating, and pest control. The agricultural sector's demand for propane is influenced by factors such as crop yields, weather conditions, and farm economics.

As countries and industries aim to reduce greenhouse gas emissions and shift to cleaner energy sources, propane's low carbon intensity and minimal environmental impact make it an attractive option. Government initiatives and policies promoting clean energy contribute to the growth of the propane market.

Adequate infrastructure, including storage facilities, transportation networks, and distribution systems, is essential for a well-functioning market. Investments in infrastructure expansion and development enable efficient supply chains and facilitate market growth.

What are the Major Obstacles Faced by Propane Manufacturers?

“Competition from Alternative Energy Sources, Price Volatility, and Stringent Environmental Regulations Governing Propane Production”

The market faces competition from alternative energy sources such as natural gas, electricity, and renewable energy. Availability and affordability of these alternatives can influence consumers’ choices and reduce demand for propane in certain applications.

Propane prices can be subject to volatility due to factors like changes in crude oil and natural gas prices, weather events, and supply-demand imbalances. Price fluctuations can impact consumer affordability and affect market demand.

Regulatory policies and standards related to safety, environmental protection, and emissions can impact the propane market. Compliance with regulations and the associated costs can create challenges for market participants.

“Limited Access to Propane Supply Sources and Low Awareness of Benefits of Propane”

The market can be influenced by geographical factors, such as access to supply sources, transportation costs, and regional variations in demand. Remote or rural areas with limited infrastructure may face challenges in propane availability and affordability.

Consumer awareness and perception of propane as a clean and sustainable energy source can influence market demand. Educating consumers about the benefits and environmental advantages of propane compared to other fuels is essential for market growth.

As countries and industries strive to achieve carbon neutrality and reduce greenhouse gas emissions, there may be increasing pressure to shift away from fossil fuels, including propane. This can pose a long-term challenge to the propane market's growth if alternative clean energy sources become more prevalent.

Country-wise Analysis

Why Does China Stand Out as a Prominent Market for Propane Manufacturers?

“Growing Autogas Industry and Extensive Propane Utilization to Meet Fuel Needs”

To meet its large domestic demand, China buys enormous quantities of propane from other countries. The rising need for propane dehydrogenation facilities, or PDH plants, has been attributed to the increase in propane imports in the country.

China is one of the most important autogas markets in Asia Pacific. The autogas industry in China grew mostly as a result of municipal initiatives to advertise alternative fuels in response to the country's rising air pollution problem.

• According to the China Association of Automobile Manufacturers, the total shipment of new energy vehicles was projected to reach 3.51 million units in 2021. In the first half of 2022, China witnessed a remarkable surge in the registration of new energy vehicles (NEVs), with a total of 2.21 million units being registered.

What Opportunities Await Propane Producers in the United States?

“High Energy Demand Driven by Rapid Urbanization and Increased Housing Requirements”

The United States, as the leading global producer and consumer, experiences significant economic growth, driving rapid urbanization and increased housing demand. Rural residents are moving to cities in search of higher-paying employment opportunities.

Development in the United States is largely influenced by regulations focused on quality and safety, which shape gas usage. Standard guidelines for manufacturing, storage, and distribution play a crucial role. Furthermore, the presence of abundant raw materials and significant shale gas reserves are expected to drive expansion in the forecast period.

Category-wise Insights

How is the Residential Sector Augmenting the Demand for Propane?

“Extensive Reliance on Propane in Rural Areas with Limited Access to Natural Gas”

From 2023 to 2033, the residential segment is expected to expand at a 5.4% CAGR. In the domestic market, propane is used for air conditioning, water heating, cooking, refrigerating foods, drying clothing, lighting, and powering fires. Propane is employed in residential settings, particularly in rural areas with limited access to natural gas services. A significant number of homeowners rely on propane to fulfill their energy requirements.

Increasing number of new residential buildings, together with continuing fuel oil transitions, is predicted to boost the adoption of electricity and natural gas for residential heating over propane. This is anticipated to have an impact on the demand for propane.

What’s Contributing to High Utilization of HD-5 Propane?

“Widespread Utilization of HD-5 Propane as Engine Fuel”

HD-5 is consumer-grade propane. It is the highest grade when compared to HD-10 propane, commercial propane, and other types of readily available propane. The HD-5 code indicates that propane is capable of being used as an engine fuel.

HD-5 refers to propane that meets the necessary criteria for selling and labeling as the highest-grade propane. Propane that fulfills the HD-5 criteria must contain at least 90% propane, a maximum of 5% propylene, and residual quantities of other gasses such as isobutane, butane, methane, and others.

Competitive Landscape

The propane market is characterized by consolidation and mergers. These activities can reshape the competitive landscape by creating larger entities with increased market share and economies of scale.

Companies investing in research and development to improve propane-related technologies and equipment can gain a competitive edge. Advancements in propane production, storage, transportation, and utilization can contribute to its efficiency, safety, and environmental performance.

• In March 2022, KBR and ExxonMobil Catalysts and Licensing LLC ("ExxonMobil") entered into a collaboration to enhance propane dehydrogenation (PDH) technology. ExxonMobil's new proprietary catalyst technology is to be used with KBR's own K-PRO Propane Dehydrogenation (PDH) technology to convert propane into propylene.
• Suburban Propane Partners LP announced the renewal of its 2020 deal with U-Haul to provide environmentally friendly and sustainable propane in California in October 2021.

Key Segments of Propane Industry Research

• By Form :

  • Liquid
  • Gas

• By Grade :

  • HD-5 Propane
  • HD-10 Propane
  • Commercial Propane

• By Application :

  • Industrial
  • Commercial
  • Residential
  • Agriculture
  • Transportation
  • Chemicals & Refineries

• By Region :

  • North America
  • Latin America
  • Europe
  • Asia Pacific
  • Middle East & Africa