Propane Prices Surge as Record Exports Drain Domestic Supply

The Situation

Mont Belvieu spot prices jumped 12% to $0.89/gal this week, driven by record 1.8M bbl/day LPG exports to Asia. Retailers relying on spot purchases are feeling immediate pain, and fall fill programs priced just two weeks ago are already underwater.

The Facts

### Speed Shocks Traders

Mont Belvieu closed at $0.891/gal, up from $0.791 in just seven trading days. This marks the largest weekly move since February 2024. LPG exports hit an unprecedented 1.8M bbl/day, shattering the previous record of 1.65M from March 2025.

### Inventory Worries Mount

The EIA reports 58.2M barrels in stock — 8% below the five-year average. Inventory builds have been running 15-20% below the seasonal pace for four consecutive weeks. Midwest rack premiums have widened to $0.06–$0.09/gal, while the Northeast sees premiums of $0.10–$0.14/gal delivered.

Business Impact

A 500,000-gallon annual retailer paying $0.89/gal versus $0.79/gal faces an additional $50,000 in costs. Wholesalers who priced fall pre-buy programs at sub-$0.80 are now looking at $0.04–$0.07/gal margin compression. This export demand appears structural, so don't expect a quick reversal.

Key Takeaways

• Export demand at 1.8M bbl/day is structural, not temporary.
• Lock fall/winter contracts this week to secure pricing.
• Midwest rack premiums are the widest they've been since the 2023-24 polar vortex.
• Communicate market conditions proactively and transparently to your top customers.

Competitive Advantage

Retailers who locked in summer supply can now offer aggressive fall pricing that competitors cannot match. Transparent customer communication during periods of volatility builds loyalty that outlasts any market spike.