Total US inventory reached critical days of disposition levels in February 2018. Propane days of disposition reached critical inventory levels of 19.8 and eventually fell below 18 days of disposition in mid-February as IHS Waterborne February export data continued to show elevated levels of exports. Prices in Mont Belvieu reacted to the critical days of disposition and quickly increased from 73 CPG to more than $1.00 per gallon. Since falling to critical levels in February, inventory continued to fall on an outright basis but increased on a days of disposition basis as both exports and demand fell. IHS expects that the US will move out of critical inventory levels by the end of March due to lower residential/commercial demand and reduced exports.
In February, high prices in Mont Belvieu greatly reduced the arbitrage to Japan and led to weaker exports versus 2017. If this continues, inventory trends would be markedly different than those witnessed in 2017 which saw exports remain high well into the spring. If exports do fall according to arbitrage economics, IHS expects lower exports combined with higher supply due to a recovery in US crude production to lead to well stocked inventories and lower prices this spring and summer.