India LPG Supply Restored To Pre-War Levels Via Import Surge

India confirmed on June 25 that industrial and commercial liquefied petroleum gas (LPG) supply has returned to pre-war levels, as import volumes recovered steadily through the month, according to an official government notice released on that date.

The recovery reflects a combination of policy adjustments and a sharp rebound in imports, easing constraints that had previously disrupted industrial users across multiple sectors.

Supply Side: Policy Shift And Import Expansion Drive Recovery

The government’s latest policy adjustment has rebalanced refinery priorities for LPG production. Refineries are no longer required to prioritize LPG output, with authorities instead guiding propane and butane fractions toward petrochemical feedstock applications.

At the same time, a clear supply safeguard has been maintained: civilian LPG distribution remains unaffected, and domestic LPG output is required to stay above 40,000 tonnes per day.

Import growth has been the central driver of the recovery. According to estimates from commodity analytics firm Kpler, India’s LPG imports from the United States in June are projected at 1.09 million tonnes, accounting for around 60% of total imports and marking a monthly record high.

Imports from the Middle East have also rebounded to 617,000 tonnes, rising significantly from May levels, though still below pre-war volumes. The United Arab Emirates remains India’s second-largest LPG supplier in the region.

Logistical constraints continue to shape trade flows. Much of the Middle East-to-India LPG cargo is transferred via ship-to-ship operations at Sohar Port in Oman before being transported by very large gas carriers (VLGCs) to Indian terminals.

Demand Side: Gradual Consumption Recovery, Bulk Supply Still Lagging

India’s industrial LPG demand spans food services, manufacturing, pharmaceuticals, and agriculture. In a normal year, consumption is estimated at around 2.9 million tonnes, representing roughly 9% of total national LPG demand.

Data from India’s Ministry of Petroleum shows industrial LPG consumption reached 195,100 tonnes in May, down 12.6% year-on-year but up 4% month-on-month, indicating a gradual stabilization trend.

However, recovery remains uneven. Bulk LPG supply to large industrial consumers is still operating at only around 50% of pre-war levels. In May, bulk deliveries stood at just 10,800 tonnes, down 83% year-on-year, making it the weakest segment in the recovery cycle.

Domestic production has shown steady improvement. India’s LPG output rose to 52,000 tonnes per day in May, up from 50,000 tonnes per day in April, reinforcing the broader supply-side recovery.

Industry Impact: Feedstock Relief Drives Petrochemical Price Correction

The policy shift allowing greater flexibility in LPG allocation is expected to ease feedstock shortages in India’s petrochemical sector, particularly supporting a recovery in polypropylene (PP) production capacity.

Previously, approximately 80% of India’s PP capacity had been operating under reduced utilization due to raw material constraints. This disruption tightened packaging material supply chains, forcing downstream manufacturers to increase imports from China and Southeast Asia.

Market data from energy intelligence provider Argus Media shows that improved supply expectations have already contributed to a sharp price correction. As of the week ending June 19, PP raffia CFR India prices fell to between $1,180 and $1,270 per tonne, significantly lower than mid-April levels.

Market participants also expect broader Asian petrochemical price declines to increase the likelihood that India will reinstate import duties on 40 petrochemical product categories that were previously exempted. Industry sources note, however, that a full normalization of domestic petrochemical supply chains to pre-war levels is likely to take additional time.