Butane Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

Butane Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

During the forecast period, the butane market is estimated to witness a CAGR of over 6%.

The butane market was affected by the COVID-19 virus, as it is used in the residential sector. The major use of butane is in LPG, which increased demand during the pandemic as most families were confined to their homes. The consumption of LPG cylinders spiked exponentially for a major part of the year. India, the second largest LPG consumer, also saw a hike in demand. According to the Oil Ministry, the sales of domestic LPG have registered a growth of 10.3 % during the fiscal year (April 2020 to February 2021). After the COVID era, the other sectors have also started to open up, thus keeping the demand for butane high along with its usage in the residential sector, which had not seen much of a hit since the pandemic. Therefore, the demand for butane is positively impacted in the post-pandemic era.

• Over the long term, one of the major factors driving the market studied is the rising demand from the petrochemical industries. Apart from this, increasing demand from the metalworking and construction Industry is also considered one of the reasons driving the market forward.
• However, increasing research and development in renewable sources are expected to negatively affect the market's growth.
• Nevertheless, the increasing use of butane in power generation will likely act as an opportunity.
• Asia-Pacific dominated the world market, with the largest consumption generated by China and India.

• Butane is a highly flammable, colorless, liquefiable gas. It is a fossil fuel utilized in homes, farming, industry, transportation, and other industries.
• Butane is used as LPG, refrigerant, lighters, and aerosol. It is also used to fuel cutting torches and other equipment. Due to their ability to be efficiently compressed, gas canisters are an excellent choice for storing butane.
• LPG is the most used cooking oil in the world, virtually in all households. The major reason for LPG usage over any other fuel source is that it is inexpensive and includes an excellent heating capability. It allows us to prepare food in less time, saving money on fuel. It also burns completely and produces no residue or particle matter, resulting in lower maintenance costs and a lower carbon impact.
• According to Observer Researcher Foundation, the consumption of LPG in India during 2021-22 was about 13% of the total petroleum product consumption. Of these, approximately 90% of the total was consumed by households and 10% by other industries. Over 60% of LPG was imported, and over 99% of domestic production was from public-sector refineries.
• During the World LPG week 2022, held in India, the Minister of Petroleum and Natural Gas applauded the awareness spread by the PMUY (Pradhan Mantri Ujjwala Yojana) scheme. It covered around 9.55 crore households in India till November 2022.
• He also highlighted the growth of the LPG sector in India in recent years by mentioning that the LPG coverage in India improved to 105.4% in Nov 2022, compared to 61.9% in April 2016.
• According to the global economic analysis specialist ING, the German government also set affordable housing as one of the major objectives for the country. The government plans to build 400,000 new housing units every year, 100,000 of which are publicly subsidized.
• Owing to the enormous scope of butane in LPG production, the basic necessity of almost every residence around the globe, the butane market is expected to grow substantially during the forecast period.

• Asia-Pacific dominated the global market share for the butane market. The increasing LPG usage in the residential and commercial sectors and the dominance of the Asia-Pacific region in the automobile industry saw the region dominate every aspect of the butane market.
• According to the Observer Researcher Foundation, LPG consumption in India during 2021-22 was approximately 13% of total petroleum product consumption. Approximately 90% of the total was consumed by households, with the remaining 10% absorbed by other industries.
• According to the PMUY scheme initiated by the Indian government, India already became the second-largest consumer of LPG across the globe. The scheme aims to replace conventional cooking fuels such as firewood and cow dung in rural regions. These contribute to environmental deterioration and have negative health consequences with a much more efficient fuel that does not affect the environment negatively.
• China also saw increased demand for LPG during 2022 due to the increasing petrochemical capacity. Looking at the demand for LPG, Russia also doubled its rail exports of liquefied petroleum gas (LPG) to China in 2022 as part of the Kremlin's drive to diversify its energy export sales. The exports of LPG saw a major increase from 62,600 tonnes in the year 2021 to 147,100 tons in 2022.
• Furthermore, the growing production of motor vehicles is expected to support the domestic demand for butane, used in engine oils. According to the China Association of Automobile Manufacturers, the country saw an increase of 2.1% in the sales of automobiles in the year 2022 compared to 2021.
• Owing to the abovementioned factors, the increasing demand for butane is expected to increase exponentially in the Asia-Pacific region during the forecast period.

The butane market is highly fragmented, with international and local players in individual countries. The major companies include (not in particular order) Exxon Mobil Corporation, BP plc, Shell plc, Chevron Phillips Chemical Company LLC, and Merck KGaA, among others.

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