Analysis: Record U.S. Propane Stocks Define LPG Markets in 2025


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- The U.S. LPG market experienced a year defined by 
record stockpiles and depressed prices for propane as well as new capacity 
projects across the industry.

   Propane inventories hit a historic high of 106.1 million bbl in October, 
according to the Energy Information Administration. While stocks begun their 
seasonal drawdown from there for the approaching winter, they remained about 
17% above the five-year average by mid-December, providing a massive supply 
cushion likely to persist into early 2026 for residential heating needs.

   Propane production itself rose nearly 6% year-on-year to 2.8 million bpd, 
fueled by resilient drilling in the Permian Basin. The region's associated gas 
-- a byproduct of oil extraction -- contains a high concentration of propane 
and now accounts for nearly half of all U.S. associated gas production. Permian 
gas output reached an estimated 26.2 Bcf/d this year, up from 25.4 Bcf/d in 
2024.

   Average wholesale prices for propane at Mont Belvieu, the primary pricing 
hub for LPG, struggled to maintain momentum in 2025. Prices frequently hovered 
near 70cts gallon, trailing last year's 78cts average as supply consistently 
outpaced total domestic and international consumption.

   By December, robust inventories and record production pushed benchmarks 
lower, with spot prices dipping toward 64cts gallon by mid-month.

   Domestic propane demand, where heating needs constitute roughly 54% of the 
market, continued a decade-long trend of stagnant growth to average 1 million 
bpd.

   Efficiency gains from heating technology and electrification in rural 
markets restricted domestic heating demand for propane, with the slack only 
modestly offset by the fuel's use as a petrochemical feedstock.

   Propane's contribution as a feedstock to resin was also limited as U.S. 
production of major plastic resins remained nearly flat on the year, rising 
just 0.8% through October to reach 85.1 billion lbs.

   Exports Surge for Ethane, High Stocks for Butane

   Ethane, the second-largest LPG product, saw output average 2.8 million bpd 
in 2025, remaining relatively flat as producers balanced record field potential 
against mid-year export disruptions.

   Despite this, net exports surged 14% on the year as U.S. producers expanded 
waterborne capacity at Nederland and Neches River to meet growing demand from 
Asian petrochemical hubs.

   Nearly half of U.S. ethane exports went to China, which remained its primary 
destination, even as new federal licensing requirements and shifting trade 
policies earlier in the year pressured margins for overseas ethylene crackers.

   Production of butane, a key blending component in gasoline, held near record 
levels of 0.7 million bpd in 2025 following a 20% surge the prior year.

   While butane supplies were largely absorbed by high refinery utilization 
rates -- which averaged 95% during the U.S. summer driving season -- 
inventories remained at multi-year highs, keeping downward pressure on 
wholesale prices through the fourth quarter.

   LPG capacity expansions also kept the industry busy through the year. (See 
table below)

   Looking ahead, the EIA forecasts a 16% growth in ethane exports in the 
coming year as the second phase of the Neches River terminal comes online. 
Adding 180,000 bpd of capacity, the expansion cements the U.S. standing as the 
dominant global provider of waterborne ethane petrochemical feedstock.

   At home, the propane stock overhang from late 2025 is expected to keep 
benchmark prices under pressure. Furthermore, rising adoption of commercial 
electric vehicles -- highlighted by Georgia's market share doubling to 7.1% -- 
poses a growing long-term threat to demand for NGLs in road-fuel blending.

   Key U.S. LPG & Midstream Projects (2025)

Company                 Project / Asset Location     Capacity/Products
Enterprise Products     Orange County, Texas         120,000 bpd (Ethane Export)
Energy Transfer         Jefferson County, Texas      250,000 bpd 
(Ethane/Propane Flex)
Phillips 66             Midland Basin, Texas         440 MMcf/d (Gas/NGL 
Processing)
ONEOK                   Permian & Gulf Coast         1.4 Bcf/d (NGL 
Fractionation)

    




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