As winter approaches, Japan is proactively securing liquefied petroleum gas (LPG) supplies to meet anticipated heating and energy demands. In contrast, neighboring countries South Korea and China are offloading surplus LPG cargoes due to differing energy requirements and market conditions.
Japan’s Strategic LPG Procurement
In November 2024, Japan imported approximately 801,000 metric tons of LPG, a decrease from October’s 883,000 metric tons and significantly lower than the 1.039 million metric tons imported in November 2023. Despite this reduction, Japanese buyers are actively purchasing LPG for December delivery, with transaction prices ranging from discounts of $5 per metric ton to premiums of $3 per metric ton relative to the December Far East Index. This procurement strategy aims to ensure sufficient energy supply during the colder months.
A key factor driving Japan’s LPG demand is its use in adjusting the calorific value of city gas. The country’s increasing imports of lean liquefied natural gas (LNG) from the United States necessitate higher volumes of LPG for blending to achieve the desired energy content. The Ministry of Economy, Trade and Industry projects that LPG demand for city gas usage will grow at an average annual rate of 2.4%, reaching 1.722 million metric tons by fiscal year 2028-29, up from 1.526 million metric tons in fiscal year 2023-24.
South Korea and China’s Market Dynamics
Conversely, South Korea and China are reselling LPG cargoes, as their domestic demand for LPG in winter is minimal. South Korea primarily relies on LNG for heating, reducing its need for LPG during colder periods. In November, South Korea loaded 136,000 metric tons of LPG, an increase from October’s 114,000 metric tons, with the majority destined for China. However, China’s demand for propane has slowed due to plant maintenance and pricing differentials, leading to reduced consumption and increased resale of LPG cargoes.
In South Korea, the domestic LPG price as of November 18, 2024, was KRW 1,029.84 per liter (approximately USD 0.78 per liter). This price reflects the domestic market and may differ from export prices. In China, LPG prices have experienced fluctuations due to various factors, including import costs and supply limitations. For instance, in November 2024, imported LPG cargoes of mixed propane and butane in East China were traded at Yuan 3,800-3,900 per metric ton, up around Yuan 300 per metric ton from the previous week. These figures provide insight into the pricing dynamics influencing South Korea’s and China’s decisions to resell LPG cargoes.
Implications for the Regional LPG Market
These contrasting approaches among East Asian nations highlight the region’s diverse energy strategies and market responses. Japan’s proactive LPG procurement underscores its commitment to energy security and adapting to evolving energy import patterns. Meanwhile, South Korea and China’s resale activities reflect their current energy surpluses and strategic market positioning.
As the winter season unfolds, these dynamics will continue to shape the LPG market in East Asia, influencing pricing, supply chains, and regional energy policies.
