Canada is rapidly emerging as a key player in the global propane market, with exports reaching record highs in 2024. This growth, driven by enhanced export facilities and robust demand, particularly from Asia, presents strategic opportunities for small business owners involved in energy, manufacturing, and logistics. As propane prices in Canada remain competitive, the implications for U.S. businesses could be significant.
Over the past decade, Canada’s propane exports have surged, owing largely to new marine terminals that facilitate the shipping of propane from western Canada to international markets. The new Ridley Island Propane Export Terminal (RIPET) and Prince Rupert Terminal have paved the way for more direct propane shipments, especially to Japan and South Korea, where demand for petrochemical feedstock is on the rise.
"The growth in Canadian propane exports comes against a backdrop of increasing global demand for propane, driven by petrochemical production," the U.S. Energy Information Administration (EIA) notes. Until 2018, the United States was the primary destination for Canadian propane, but that has changed. By 2024, U.S. shipments accounted for just 58% of Canada’s propane exports, with Asia capturing a growing share.
For small business owners, this trend opens up several practical possibilities. For those in the energy sector, increased Canadian exports could mean more competitive pricing on a valuable feedstock. For manufacturers relying on propane in their production processes, access to affordable energy sources can lead to cost savings and improved margins. Logistics companies may also find new opportunities in transporting propane for U.S. and Asian distributors, particularly as Canadian exports become more streamlined.
Propane spot prices in Edmonton, Alberta, are typically lower than in both East Asia and the U.S. Midwest, making Canadian propane attractively priced. This price advantage is significant for small businesses in the Midwest that depend on propane for space heating, particularly in the Upper Midwest and Northeast during the winter months.
However, challenges accompany these opportunities. Small businesses in the propane distribution chain need to consider the logistical complexities of importing propane from Canada. While most exports to the U.S. have traditionally been transported by rail, around 81% of the Canadian propane sent south last year utilized this method, ensuring scalability during peak winter demand. However, as more propane is routed to Asian markets, U.S. businesses may face tighter supply and consequently higher prices.
Moreover, the infrastructure to support this burgeoning trade is still evolving. While significant investments have been made in marine export terminals, increasing capacity presents challenges, such as potential environmental concerns and regulatory hurdles. As smaller operators might not have the same resources as their larger counterparts, they could find themselves at a disadvantage when competing for propane supply.
Looking ahead, the expansion of the Ridley Island Energy Export Facility (REEF), planned for completion in 2026, is set to further boost Canada’s propane export capacity. This additional 55,000 barrels per day capacity is expected to primarily serve Pacific Basin markets, thereby intensifying competition in the propane sector.
With a growing portion of Canada’s propane now being channeled toward international markets, U.S. small business owners must stay informed about these shifts and consider the potential impact on prices and availability. Those involved in energy procurement and consumption should keep abreast of prices and inventory levels, particularly during winter months when demand surges.
As Canada positions itself as a leading propane exporter, small businesses should strategically evaluate how they can leverage these changes to their advantage while staying mindful of potential supply chain disruptions and the evolving landscape of propane distribution.
For further details on Canada’s propane export growth and trends, the full report from the EIA can be found at EIA Today in Energy.
Image Via Envato: chartchaik1
