Increase in propane field production growth forecast combined with export infrastructure constraints lead to forecast elevated stock levels at least through 2020.
US propane production growth continues to increase and at a faster than expected pace. IHS Markit has increased our forecast for growth in total propane field plant production through 2019 and 2020. Exports have been the recent source of balancing demand in the face of the growing supply pressure from the increases in production. Recent EIA weekly estimates of exports have been bouncing around historic record levels since mid-April. IHS Markit’s Waterborne Live service data shows that Gulf Coast LPG exports through April were at the announced capacity of the operating terminals, while preliminary May numbers are showing a similar export level. With waterborne terminals operating at capacity and expansions not coming online until the end of the third quarter of the 2019 (Enterprise) and halfway through 2020 (Targa) exports are not forecast to be able to grow much faster than previously forecast to match the increasing forecast supply. With faster growing supply and a restricted outlet, stocks are expected to continue to build through 2019 and remain elevated in 2020.