The US propane market was on pace for a strong year in 2025, before a trade war erupted between Washington and Beijing. East Daley Analytics had been predicting 5.7% demand growth in the Propane Supply & Demand Report, but retaliatory tariffs by China create big risks for a key export market.
A colder winter had set the table for a bullish year in propane. Domestic demand through March ’25 is up 11% compared to the same period in 2024. Frigid temperatures in January and February boosted demand for heating, returning the market to more normal winter consumption after the warmest winter on record in 2024.
The relationship is shown in the chart of the 4-week average propane and propylene product supplied, according to Energy Information Administration (EIA) data. Propane storage inventory has fallen below a year ago as a result of a more seasonal winter, setting up firmer demand in the spring and summer to restock inventory.
The other important piece of the propane demand puzzle is exports, and the news on that front has been far less supportive. The Trump administration on April 9 raised the tariff rate on Chinese imports to 125% after China imposed new 84% duties on US goods. On April 11, China responded with retaliatory 125% tariffs on all US goods. Treasury Secretary Scott Bessent said Wednesday that the administration does not plan to lower tariffs with China until the governments have negotiated a broader trade agreement.
The latest tariffs will increase costs and put the fast-growing market for US propane at risk. In 2024, US propane exports to China averaged ~310 Mb/d, doubling in just two years as China’s petrochemicals sector expanded. China now accounts for 17.5% of total US propane exports (see figure). Demand from China has propelled record LPG exports and supported terminal expansions from companies like Enterprise Products (EPD), Energy Transfer (ET) and Targa Resources (TRGP).
The industry managed to navigate the last trade war with China in 2018-19 by exporting propane to other markets. But pulling off the same trick will be harder this time given the growing dependence on the Chinese market.
East Daley is reviewing our demand forecast for a potential downgrade in the next Propane Supply & Demand Report. – Julian Renton. Tickers: EPD, ET, TRGP.
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