The global liquified petroleum gas (LPG) market is expected to grow at a compound annual growth rate of 4.91% over the forecast period to reach a market size of US$153.146 billion in 2026 from US$109.493 billion in 2020. LPG is a by-product of propane and butane and mainly extracted through refineries (crude oil) or natural gas (propane and butane’s by-product), which differs from area to area, such as in North America, the majority of the supply of LPG is from natural gases, where the United States and Canada are the major exporters of LPG, and that in the Asia Pacific is from refineries’ extraction. At the global level, the majority of extraction of LPG in the market is from natural gas, mainly contributed by North America, Europe, Middle East. Considering the different methods of extraction (natural gas and refinery), the natural gas process is more appealing as it involves a gas separation facility, which extracts the LPG easily and cost-effectively, whereas the refineries involve a high installation cost of the liquefaction process. The distribution of LPG can be done through tankers, drums, or pipelines, depending on the logistics and demand of the good.
Liquified petroleum gas is a clean fuel, cost-effective in use, and an environment-friendly substitute for the gasoline and diesel in the market that is boosting the demand for the LPG. The major drivers for the global LPG market are an increase in consumption of LPG due to an increase in population growth, government initiatives to use cleaner fuel, industrialization, and urbanization, increasing investments in developing countries, and improving R&D. While, the storage issue of LPG, irregular domestic supply of LPG, high installation cost of LPG to liquefaction process are the major restraints in this market. Due to the properties of LPG such as highly inflammable and so on creates the problem for the suppliers to store it and supply it accordingly. Among the application segment, the residential and commercial segments are the dominant segments globally due to the increasing investments and increase in urbanization and industrialization. Since people’s preference towards traditional uses of fuel and government initiatives has been boosting the demand for the LPG worldwide.
The pandemic covid-19 has adversely impacted the global demand for LPG in the market, especially in the commercial sector, and hence, impacted the growth rate. On the other side, the residential demand for personal consumption purposes such as household cooking has increased. Overall, the increasing demand for the LPG has projected positive growth in the upcoming period. Due to lockdowns, the demand for LPG in Europe continues to affect adversely the market. In other regions, several players are entering the market to fulfill the demand for LPG. US and Russia are expanding in the LPG market to acquire a significant market share.
Growth of SMEs
Some under-construction projects of NGL are Arbuckle II, Front Range Expansion, Texas Express Expansion, Mariner East 2X, and Lone Star Express Expansion that are projected to be operational by 2020. Some developed projects that will be operational by 2022. The marine industry has significant growth for the LPG market in the upcoming future as LPG is becoming popular as a marine fuel in the shipping industry. All these upcoming projects and boom in sale oil US is going make the US the top supplier and producer of the crude oil in the market and hence, the top supplier of the LPG as well. This increase in supply (along with the increase in demand) also helps to maintain the prices of LPG in the market and hence, creates a potential demand and growth for the same in the future.
The Asia Pacific to witness lucrative growth.
Asia Pacific is predicted to have an attractive region for the global LPG market, as due to the increasing population in this region, the demand for the LPG is booming there, especially in China, India, and Japan.
Global Liquified Petroleum Gas Market attractiveness, BY GEOGRAPHY
Source: Knowledge Sourcing Intelligence Analysis, Sample figure
Also, the investments in industrialization and urbanization in these developing countries are increasing due to cost-effectiveness is driving the growth of demand for LPG in the forecast period in the Asia Pacific region. Apart from it, government initiatives to promote the LPG for cooking instead of conventional fuels to reduce the harmful gases into the environment.
Frequently Asked Questions (FAQs)
Q1. What will be the liquified petroleum gas (LPG) market size by 2026?
A1. The global liquified petroleum gas (LPG) market is expected to reach a market size of US$153.146 billion in 2026.
Q2. What are the growth prospects for the liquified petroleum gas market?
A2. The liquified petroleum gas (LPG) market is expected to grow at a CAGR of 4.91% during the forecast period.
Q3. What is the size of the global liquified petroleum gas (LPG) market?
A3. The Liquified Petroleum Gas market was valued at US$109.493 billion in 2020.
Q4. Which region holds the largest market share in the liquified petroleum gas market?
A4. Asia Pacific is predicted to have a significant share of the global LPG market, as due to the increasing population in this region, the demand for the LPG is booming there, especially in China, India, and Japan.
Q5. What factors are anticipated to drive the liquefied petroleum gas market growth?
A5. The major drivers for the global LPG market are an increase in consumption of LPG due to an increase in population growth, government initiatives to use cleaner fuel, industrialization, and urbanization, increasing investments in developing countries, and improving R&D.