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Propane Market will grow at highest pace owing to rising demand from residential sector

Leena Shedmake
Propane Market will grow at highest pace owing to rising demand from residential sector

Propane is a three-carbon alkane with the molecular formula C3H8. It is a gas at standard temperature and pressure (STP) but is often stored and distributed in its liquid state because of propane's lower vapor pressure relative to natural gas or gasoline. Propane is widely used as a fuel for heating, cooking, vehicles and various industrial processes. Some key advantages of propane are that it is safer and cleaner than many fossil fuels.

The global propane market is primarily driven by increasing demand from the residential sector. Propane is widely used in home barbecues, portable stoves, residential furnaces and fireplaces. It provides a convenient and affordable energy source for home heating especially in rural areas not connected to a gas pipeline distribution system. With growing urbanization and infrastructure development, many people are shifting from wood and kerosene to cleaner energies like propane. Propane equipment manufacturers have also introduced various advancements to improve efficiency, safety and convenience of propane devices used in households.

The Global propane market is estimated to be valued at US$ 113.48 Bn in 2024 and is expected to exhibit a CAGR of 14% over the forecast period 2024 to 2031.

Key Takeaways

Key players operating in the Propane Market Growth are Chevron Corporation (U.S.), Royal Dutch Shell Plc (U.K.), Exxon Mobil Corporation (U.S.), ConocoPhillips (U.S), Reliance Industries Ltd. (India). These companies are investing heavily in expanding infrastructure for storage, transportation and retail supply of propane to meet the growing demand.

The demand for propane is expected to grow significantly from the residential sector as people shift from polluting energies like firewood and kerosene to cleaner propane gas for various household applications. The increasing affordability and availability of propane cylinders and equipment are driving this adoption especially in developing regions.

Technological advancements are also supporting the growth of propane market. Manufacturers are developing next-generation propane equipment with improved efficiency, automisation, control systems and safety features. Convertible grills and furnaces that can run on either propane or natural gas offer more flexibility to users.

Market Trends

Portable/standby generators powered by propane are gaining popularity for backup power especially during outages. These are lighter and easier to transport compared to gasoline-powered generators.

Auto-switchover systems allow residential and commercial boiler systems to automatically switch between propane and natural gas based on availability or cost. This provides redundancy in energy supply.

Market Opportunities

Rising investment in infrastructure to expand rural pipeline access for propane and LPG distribution can open new markets and applications. This will drive affordable access for residential consumers.

Growing demand for auto-LPG as an affordable automotive fuel in developing countries presents a major opportunity. Local production of LPG vehicle kits can boost the nascent auto-LPG market.

Impact of COVID-19 on Propane Market Growth

The COVID-19 pandemic impacted the propane market growth negatively during its initial phases. With lockdowns imposed worldwide, demand from the transportation and industrial sectors dropped sharply. As people stayed homebound, the demand from residential and commercial sectors also reduced initially. Transportation and logistics faced difficulties amid restrictions on movement of vehicles and goods. Supply chains disrupted globally affecting the production and distribution of propane and other energy sources.

However, with time, demand rose from the residential sector as people spent more time at home. Commercial establishments switched to propane from other fuels to minimize costs. The agriculture sector, which largely relies on propane, witnessed continued demand. While transportation and industrial uses remained low compared to pre-COVID levels, gradual easing of restrictions aided recovery. Vaccination drives boosted economic activities and mobility from mid-2021. This helped propane market recover, though full recovery to pre-pandemic levels is still underway.

Future strategies for propane market players include diversifying supply chains to build resilience against disruptions. Focusing on growing residential, commercial and agriculture applications can counter cyclical demand patterns. Investing in logistics and distribution infrastructure can help ensure steady supplies. Emphasizing on renewable and cleaner sources of propane produced from biomass or waste can make the market greener and future-proof. Transitioning storage and transportation to less carbon intensive options can aid environmental goals as well.

Geographical Regions with Highest Propane Market Value

North America has the highest value concentration in the global propane market, mainly led by the United States. Strong demand comes from the residential, commercial, industrial and transportation sectors in the region. Abundant domestic production and well-established refueling infrastructure and distribution networks cater to this demand.

Asia Pacific has emerged as the fastest growing regional market for propane globally in recent years. Rapid industrialization and infrastructure growth and rising LPG consumption in countries like China and India propel the demand. Increasing focus on cleaner cooking fuels also boosts the adoption of propane. The region offers huge untapped market potential that players are actively targeting.

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Leena Shedmake
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