Butane Increases Share in US Export Portfolio at Expense of Propane
U.S. butane exports rose in February at the expense of propane, a trend which has rolled into March and been exacerbated by the conflict in the Middle East, shipping data showed this week.
Butane exports out of the United States in February rose to their highest level since May last year. The country shipped 1.50 million metric tons of butane in that month, up from 1.475 million mt in January and 1.045 million mt a year earlier, data from shipping analytics firm Vortexa showed.
Meanwhile, propane exports dropped to 4.05 million mt in February, from 4.73 million mt in January. Propane output was at its lowest level for 12 months, when the U.S. exported 3.94 million mt, according to Vortexa data.
U.S. propane and propylene stocks were up by 800,000 bbl to 73.4 million bbl in the week that ended Feb. 27, according to data from the Energy Information Administration on Wednesday.
The rise was a surprise for many market participants, but sources attributed higher propane inventories to the rise in butane exports from U.S. ports being detrimental to propane shipments that fell below 1 million mt.
Butane and butane-propane split cargo demand is a factor in the build in propane inventories, one Houston-based broker said.
As February progressed, the shift to dock space occupied by butane became clearer. Between Feb. 23-28, the U.S. exported 705,000 mt of propane, 377,000 mt of butane and 48,000 mt of split cargoes. Comparatively, the country shipped 1 million mt of propane and 405,000 mt of butane a week earlier, as well as 1.22 million mt of propane, 326,000 mt of butane and 15,000 mt in split cargoes between Jan. 26 and Feb. 1.
Ramadan plays a key role in butane demand globally, a period which has occurred between February and March over the past two years. Consumption increases significantly in the holy month with the fuel being used for cooking large communal meals at the breaking of the fast.
Butane, split-cargo imports rise
In North Africa, February butane imports consequently hit their highest monthly level since March 2025, as the region stockpiled ahead of the holy festival, which began on Feb. 17 and continues through to March 18, contributing to the jump in imports.
North Africa imported 428,500 mt of butane in February, of which 69.9% was of U.S. origin. Comparatively in March last year, the United States supplied 70.3% of the 522,000 mt of butane.
Looking ahead to March this year, with liquefied petroleum gas (LPG) exports out of the Middle East Gulf all but frozen, following the escalation of tensions in military action between the U.S., Israel and Iran, there has been a greater reliance on U.S. supply.
There could be more split-cargo trading from the U.S. Gulf in March, at the expense of propane, one Houston-based trader noted. On Thursday, OPIS reported a deal with a Southeast Asian company selling a 2:2 cargo at 28cts/gal for H1 April.
A fellow trader reiterated the same point, citing the cancellation of Middle East Gulf cargoes as the factor, a region which is key to supplying countries like Indonesia and India with 2:2 cargoes. China is also in need of butane cargoes, the trader added.
China is in an especially peculiar situation relevant to its methyl tertiary butyl ether (MTBE) production, a key gasoline octane booster for domestic use as well as for exports.
Butane is a major feedstock for MTBE and skyrocketing prices do not bode well for Chinese export capacity and revenue, as it was operating with negative margins in the months before the Middle East Gulf conflict escalated. China exports more than 30% of its MTBE, but more importantly, its domestic reliance on this gasoline additive may suffer due to short supply and high price of butane.
However, LPG export docks are reportedly operating close to full capacity in the U.S. Gulf, capping flows, as well as prices relative to moves in Northwest Europe and Asia.
The conflict in the Middle East added fuel to an already-escalating normal butane price rally at Mont Belvieu.
Butane prices soar
Following the U.S. military strikes on Iran and subsequent jump in underlying futures, non-TET normal butane gapped sharply higher from the month before. Deals in the early U.S. trading session were struck between $1.0375-$1.055/gal (approximately $470-$478/mt), marking the highest spot price for butane in over a year. The last time non-TET normal butane traded this high was Feb. 20, 2025, OPIS price history showed.
Month-to-date, March normal butane prices are running almost 20% above February’s monthly average.
Meanwhile, February normal butane prices were already on the rise at the end of the month following the collapse of LPG infrastructure at the Juaymah facility in Saudi Arabia, forcing a halt to Middle East exports out of Ras Tanura and increasing competition for U.S. cargoes.
While this also underpinned U.S. propane pricing to some degree, normal butane was much more volatile, as this market is typically less elastic and more thinly traded. February’s non-TET normal butane monthly average of 80.24cts/gal (approximately $363/mt) was up 5.9% from January.
By comparison, Mont Belvieu propane monthly averages were down 1.2%-1.5% between January and February, OPIS price data showed.
Reporting by:
Jamie Aldridge, jaldridge@opisnet.com
Jessica Marron, jmarron@opisnet.com
Vladan Ivkovic, vivkovic@opisnet.com