Trade sources indicated that LPG exports from the Middle East, which hit a record in March 2025, are expected to decline April onwards as India demand wanes
India’s liquefied petroleum gas (LPG) imports are likely to cool down in the current calendar year (CY) largely led by plateauing consumption in the urban residential sector with the shift towards piped natural gas (PNG).
Besides, tariff wars unleashed by the US could force China to turn towards Middle East, which accounts for over 90 per cent of India’s LPG imports. This could lead to higher Saudi CP propane prices and a higher import bill for India. It may also push for India diversifying its cargoes, favouring the US.
Trade sources indicated that LPG exports from the Middle East, which hit a record in March 2025, are expected to decline April onwards as India demand wanes, at a time when expectations are for more LPG export cargoes to come online as OPEC+ unwinds voluntary production cuts.
India’s LPG exports are expected to surpass 20 million tonnes (mt) in FY25, which ended last month (11M FY25: 18.99 mt). March export data is yet to come. Imports in April-February FY25 are already higher compared to FY24 (18.51 mt) and FY23 (18.34 mt).
Over 90 per cent of LPG is consumed in households. The total active domestic customers base is 32.89 crore (December 2024). India has 10.33 crore Pradhan Mantri Ujjwala Yojna (PMUY) beneficiaries for whom the commodity is subsidised.
Export Dynamics
According to a March 19 report by maritime consultancy Drewry, India’s import growth is likely to slow down in 2025 CY as residential demand eases due to the policy shift to PNG for households (PNG-D) and biofuels as LPG penetration nears saturation.
Drewry expects residential LPG consumption to plateau due to a decline in urban LPG use with the shift to PNG as cooking fuel.
“An expected reduction in government’s LPG subsidy in 2025, a rise in residential cylinder price to align it with Saudi CP prices (the government made no provision in the budget to compensate refiners for subsidy-linked losses), and an expected premium on Saudi CP propane prices, mainly if China competes for Middle East supplies after a likely tariff war with the US,” it added.
Tariff war could reduce consumption from price-sensitive areas and create downward pressure on imports, Drewry projected.
In an April 1 commentary, Samantha Hartke, Head of Market Analysis-Americas at Vortexa, said that headwinds to increased send out by Middle East could well come from its largest buyer, India, which accounted for 59 per cent of its exports in Q1 2025, up from 57 per cent on average last year and 52 per cent in 2023.
“It is unlikely that the 2024 increase (consumption) will be repeated this year. Federal elections in India last year saw a barrage of LPG subsidies and free cylinders being given out to voters,” Hartke added.
Evolving dynamics
Drewry expects that a decline in India’s LPG import growth this year will lead to a shift in trade patterns.
“While plateauing residential demand will reduce the demand for butane, new Propane Dehydrogenation (PDH) capacity in 2025 will boost demand for propane. Thus, India will need to alter the propane-butane mix in its LPG cargoes as propane-rich US cargoes find favour with the former’s importers,” it added.
If the US-China trade war were to happen, Saudi CP prices could attract a premium, with China likely contracting Middle Eastern suppliers and thereby compelling India to diversify its import sources, including the US.
Indian buyers are already forging new ties with BPCL, signing an annual contract with Norway’s Equinor to secure 550,000 tonnes per annum of propane and butane, reducing its reliance on the Middle East.
“Adding to this dynamic, lower Mont Belvieu prices and reduced terminal fees in H2 2025 make US propane supplies even more competitive for India. Meanwhile, if China shifts to the Middle East, since it needs more propane for its PDH plants, it will likely re-export butane to neighbouring countries, further influencing regional trade patterns,” Drewry explained.
Published on April 6, 2025
