February 22, 2024
Propane Market

The Growing Demand for Cleaner Fuel is Driving the Global Propane Market

Propane, commonly used in vehicles, homes, and industries, is a versatile fuel that offers several advantages over gasoline and natural gas. It is widely used for residential and commercial heating, hot water, clothes drying, cooking, and various industrial processes such as metal welding. Propane burns cleanly and emits fewer greenhouse gases than oil or coal. It is non-corrosive, non-toxic, and odorless in its pure form but intentionally given a trace of foul-smelling chemical called ethanethiol to help detect leaks quickly. These properties make propane popular for both industrial and residential use. The global propane market has witnessed strong growth driven by stringent emission norms and aggressive climate change policies promoting cleaner fuels.

The global Propane Market is estimated to be valued at US$ 98.5 Bn in 2023 and is expected to exhibit a CAGR of 14% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market key trends:

Demand for propane as auto fuel is rising steadily. Auto propane offers economic and environmental benefits over gasoline such as lower operating costs, carbon emissions and fuel costs. Numerous countries are incentivizing use of propane vehicles to lower emissions. Canada has over 350,000 propane vehicles and the number is growing. The USA has seen 35% increase in number of propane autogas stations to 2,200 in last 5 years. Further growth in refueling infrastructure will boost demand. Stringent emission norms are prompting industries and homes to switch to cleaner alternatives and propane scores well on this front compared to fuel oil and coal. Developing nations are witnessing growing demand for LPG including propane for residential and commercial use. The clean burning characteristic and competitive costs compared to electricity or natural gas is spurring demand growth.

Porter’s Analysis

Threat of new entrants: The threat of new entrants is moderate as the capital requirements for setting up production and distribution facilities are high. However, the opportunities for niche players are increasing.

Bargaining power of buyers: The bargaining power of buyers is moderate to high as propane is a relatively low-cost alternative fuel. Buyers can choose from a variety of substitutes.

Bargaining power of suppliers: The bargaining power of suppliers is moderate as propane is produced from natural gas processing and oil refining as a by-product. Suppliers rely on downstream prices for determining profitability.

Threat of new substitutes: The threat of new substitutes is moderate to high as alternatives like natural gas, biodiesel and electricity are replacing propane for certain applications. Technological advancements can increase substitution.

Competitive rivalry: Competition in the propane industry is high with the presence of global players.

Key Takeaways

The Global Propane Market Size is expected to witness high growth supported by the expanding applications in transportation, residential and commercial sectors.

Regional analysis: Asia Pacific dominates the global propane market and is expected to maintain its lead over the forecast period. Rapid industrialization and growing residential sector in China, India and other countries will drive the demand for propane mainly as cooking fuel. North America is a major producer and consumer and will exhibit significant growth.

Key players: Key players operating in the propane market are Chevron Corporation (U.S.), Royal Dutch Shell Plc (U.K.), Exxon Mobil Corporation (U.S.), ConocoPhillips (U.S), Reliance Industries Ltd. (India). The global market is consolidated in nature with top five players accounting for over 50% of the global production. Players are investing in capacity additions and strategic partnerships to strengthen their presence across regions.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it