Panama Canal expansion to make the US – world's largest LPG exporter by 2020

Panama Canal expansion to make the US – world's largest LPG exporter by 2020

Posted on : 30 Oct, 2013 

Work on the Panama Canal expansion project is going on in full swing and is expected to be completed by 2015. Once completed, the canal will allow large vessels such as very large gas carriers (VLGCs) and LNG vessels to pass through the canal very easily.

As per Bernstein Research report recently, arbitrage flow of LPG from the US to Asia will get the maximum boost once the Panama Canal opens for business.

In the current sailing routes, LPG and other petrochemical carriers have to use the Cape Horn route that takes about 41 days or the Suez Canal route that takes 43 days to reach the Asia Pacific from the East Coast of US. The Panama Canal will reduce this sailing time to 25 days.

It will not only save time, but also reduce shipping costs by 30-50%. The cost of shipping the US LPG to east Asia will be reduced to about $100/mt from the current $150-200/mt when carried via Cape Horn. This will lead to a demand of more LPG from the US and further put downward pressure on Middle East LPG export prices.

As per current estimates, US exports about 5 million mt of LPG per year, which is expected to grow to 10 million mt/year by 2015. By 2020, the US will overtake countries like Qatar and Saudi Arabia as the world's largest LPG exporter with over 20 million mt of LPG exports annually.

Apart from LPG, LNG trade flow on the US-Asia route will also expand once the Panama Canal is operational.

About 40% of the global LPG consumption and about 75% of global LPG demand growth is from the Asia-Pacific region.

Demand for LPG is growing in Asia. It is increasingly used as a feedstock for propane dehydrogenation units, which convert propane to propylene. China has recently approved the construction of 17 PDH units that will require 12 million mt/year of additional LPG. It's specualated that China will turn to the US to meet this demand.

For more details on the world LPG trade, attend 8th LPG Trade Summit in Doha, Qatar on 18-20 November, 2013. Hear Silvia de Marucci, Senior Specialist for Liquid Bulk Market Segment, Panama Canal Authority elaborate on 'The Panama Canal Expansion & Impact on LPG Trade' at the premier event.

Get more information on the event on the official webpage or contact Ms. Huiyan at +65 6346 9147 or huiyan@cmtsp.com.sg

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