Butane Prices Hit Multi-Decade Highs as Supplies Tighten

The AFEI butane index stood at $1,180/t on November 3, and US Belvieu prices reached $920/t, a 14-year high. The rally follows a major reshaping of propane and butane trade since the US-Iran war began in March. Before the conflict, the US supplied roughly 45–50% of global LPG exports and the Middle East 30–35%. The Gulf’s share later fell to 11%, while the US share rose to 65% as American shipments replaced some lost volumes.

Asia has taken much of that replacement supply. US propane and butane accounted for as much as 75% of Asian imports from April to October, diverting cargoes from destinations including Europe. The share eased to around 55% in October as deliveries from the UAE, Kuwait, Qatar and Saudi Arabia recovered. But LPG flows from the Gulf remain insufficient to reduce Asia’s reliance on US cargoes. October butane imports at the Amsterdam-Rotterdam-Antwerp (ARA) hub fell to 130,000 tonnes, a multi-year low and 34% below a year earlier.

The mix of supplies matters as much as the volume. US LPG exports are about 75% propane and 25% butane, while Indian and other Asian cooking-gas requirements typically favour a blend closer to 50:50. More US propane cannot fully replace missing Middle Eastern butane. India felt the shortfall acutely: roughly 87% of its LPG imports came from the Gulf when the crisis began, with the UAE and Qatar together accounting for half. Imports dropped from 2.03 million tonnes in February to 1.17 million tonnes in March, a fall of more than 40%. The government directed refiners, including petrochemical complexes, to maximise LPG production and prioritise households. Some consumers switched to piped natural gas, but its higher cost and only partial indirect government support limited the relief. Recovering Middle Eastern imports and US cargoes have since given refiners more room to ease emergency LPG output and restore other production, particularly petrochemicals.

China is adding demand for industrial use. Five MTBE plants opened in 2025, with combined capacity of 3.4 million t/year. The additive raises gasoline’s octane rating, and butane supplies its hydrocarbon component through several processing steps. Chinese producers export MTBE to Asian markets, Europe and Latin America, so overseas demand can support butane purchases even when Chinese gasoline consumption is subdued.

Seasonal fuel requirements add pressure. US and European refiners use more butane in winter-grade gasoline, whose higher vapour pressure helps fuel vaporise and engines start in cold weather. This autumn-to-March demand competes with exports. US shipments peaked at a record 2.4 million tonnes in May and fell to 1.55 million tonnes in October, still 12% above a year earlier. Asia received 840,000 tonnes, or 54% of October shipments; Europe took 105,000 tonnes, about 7%. A force majeure at Energy Transfer’s Nederland terminal in Texas and a compressor outage affecting Freeport loadings last month further constrained US availability.

The economics of sending additional US cargoes to Asia have also weakened. At $920/t for US butane and about $320/t freight to India, the delivered cost is $1,240/t. The landed US price is $50–60/t above AFEI butane, making the trade unattractive for American producers. In April, the spread was minus $300–400/t, strongly encouraging shipments to Asia. More cargoes may require lower US prices or freight, or higher Asian prices—an outcome that would add to importers’ energy costs.

A sustained recovery in Gulf deliveries could ease pressure, free US cargoes for Europe and allow Indian refiners to scale back emergency LPG production. But that relief depends on maritime security in the Hormuz Strait. Renewed hostilities with Iran could send India back to the market for long-haul supplies, with Chinese industrial users and European winter demand competing for the same cargoes. The source article was written by Natalia Katona for Oilprice.com.