Global LPG markets began July with a sense of cautious optimism. Seaborne LPG imports were moving back toward seasonal norms, fueled by record export volumes from the US, which helped counter months of disruptions caused by conflicts in the Middle East Gulf. This recovery was short-lived, however; on July 7th, the failure of the US-Iran ceasefire resulted in the effective closure of the Strait of Hormuz. As a result, uncertainty has shifted from the speed of the market’s recovery to whether a recovery can even occur.
Global LPG import volumes collapsed sharply from late January as the conflict escalated, before beginning a slow-motion recovery through the second quarter. Preliminary data for July (days 1-22), showed imports surpassing to the 5-yr average, driven almost entirely by a surge in US Gulf Coast and Middle East Gulf loadings. The re-closure of Hormuz now puts the MEG part of that recovery at risk heading into August, unless alternative supply routes can compensate.
The US has become the market’s safety valve
The US Gulf Coast has functioned as the global LPG market’s backstop throughout the conflict. Through July (days 1–25), US-origin arrivals hit a record of ~2.9mbd globally, with Northeast Asia absorbing the largest volumetric increase, up roughly 110kbd m-o-m — led by strong flows into both China and India.
On the supply side, PADD 3 terminal throughput has declined in July (days 1-21), most prominently at Enterprise Houston Terminal. Meanwhile, widening C4/C3 spreads are pointing toward stronger butane exports into August, opening an additional opportunity for US exporters beyond propane. For most part of June, arb to Asia remained closed but more recently it has turned favorable, keeping the incentive to send barrels east clearly intact.
China’s LPG imports have been the clearest beneficiary of the supply reorientation. Supported by both US barrels and a brief window of MEG volumes during the ceasefire period, China’s imports climbed to ~1.4mbd in July — at seasonal highs for 2026 and approaching pre-conflict levels. Iranian volumes added a further layer of support while the ceasefire held, though their contribution remains difficult to quantify precisely given the opaque nature of sanctioned trade.
India’s recovery has been more measured but no less significant. Imports touched the 5-yr average in July, driven overwhelmingly by US-origin flows on both the East and West Coast of the country, partially offsetting the loss of nearby MEG supply that India historically relied upon. The continuation of these flows is expected in the coming months, particularly as India’s industrial LPG consumption enters a seasonally stronger period.
For the petrochemical demand complex, the picture is paradoxical. Asian PDH operators recovered their run rates in July after the supply shock earlier in the year, yet margins deteriorated simultaneously as higher feedstock prices ate into profitability. Prop-nap swaps in Northeast Asia remain firmly below the -$50/t switching threshold, meaning the forward curve continues to favour propane as a cracker feedstock over naphtha — but the gap between propane’s cost advantage and the economics of running on it is narrowing.
The central question for global LPG markets heading into August is whether mainstream Middle East Gulf exports can resume — and if so, how quickly. Under the current Hormuz closure scenario, we expect global LPG imports remaining below seasonal averages, with the US Gulf Coast continuing to carry the bulk of global supply. The US-Asia arbitrage is open via Panama Canal for approximately one month forward, providing a near-term commercial incentive. For now, market participants are pricing for continued disruption, with the Hormuz situation the single most important variable in the global LPG balance.
Source: Vortexa
