Key facts
- India has restored LPG supplies to industrial and commercial consumers to pre-war levels.
- The government directed refiners to prioritize petrochemical feedstock over LPG production.
- LPG imports, especially from the US, have risen significantly this month.
- India is set to receive its highest volume of US LPG this month, comprising 60% of total imports.
- Supplies from the Middle East have also increased, with the UAE being the second-largest supplier.
- Industrial LPG consumption saw a 4% rise month-on-month in May.
- Bulk LPG supplies to manufacturing users are back to 50% of pre-war levels.
India has restored LPG supplies to industrial and commercial consumers to pre-war levels, a move supported by a significant increase in imports, particularly from the United States. A government notification issued on June 25 indicated that New Delhi has also reversed an earlier mandate that prioritized LPG output, now directing refiners to use propane and butane streams as petrochemical feedstock instead.
This policy shift aligns with India's rising LPG imports from the US, with Kpler data showing that India is set to receive its highest volume of US LPG this month at 1.09 million tonnes, accounting for 60% of overall LPG imports. These US volumes include both term and spot cargoes booked by Indian importers. Supplies from the Middle East have also increased in June, totaling 617,000 tonnes, up from 381,000 tonnes in May, though still lower than the 1.69 million tonnes imported in February before the conflict began. Shipments from the UAE are expected to reach 224,000 tonnes in June, making it the second-largest supplier after the US.
Typically, India's industrial LPG demand is 2.9 million tonnes per year, representing 9% of the country's total LPG demand. In May, industrial LPG consumption was 195,100 tonnes, a 12.6% decrease year-on-year but a 4% increase month-on-month, as supplies began to be restored. Bulk LPG supplies to manufacturing, processing, and refining users have been restored to 50% of pre-war levels. India's annualised bulk LPG demand is 1.1 million tonnes, or 3% of overall LPG demand. In May, bulk LPG supplies totaled 10,800 tonnes, down 83% year-on-year and 9% month-on-month.
New Delhi has assured that the increased allocation of propane and butane for non-LPG uses will not affect domestic LPG availability, while maintaining aggregate indigenous LPG production at no less than 40,000 tonnes per day. Domestic LPG production reached 52,000 tonnes per day in May, up from 50,000 tonnes per day in April. The new policy is expected to boost output of key petrochemicals like polypropylene (PP), as feedstock curbs had impacted about 80% of India's PP output. This normalization could allow petrochemical plants, such as Mangalore Refinery and Petrochemicals (MRPL), to restart PP units. However, some Indian producers anticipate it will take time for domestic supplies to return to pre-war levels. The easing of restrictions might also lead the Indian government to reinstate import duties on petrochemicals, as prices in other Asian markets have declined. In April, New Delhi had waived customs duties on 40 petrochemical products to offset extra costs for domestic industries.