Butane Market Report 2025 (Global Edition)

Current scenario of the global butane market

Key drivers of the Butane Market

• Growing Residential LPG Demand Will Fuel Market Expansion

Demand for LPG in residential applications has increased, particularly in emerging nations. The use of LPG cylinders for residential applications is being heavily promoted by governments in emerging nations. The government is providing several subsidies to encourage the use of LPG. For instance, the Pradhan Mantri Ujjwala Yojana, introduced by the Indian government, aims to link undeveloped regions to LPG. The improvement in LPG coverage in India from 61.9% in April 2016 to 105.4% in November 2022, illustrating the growth of the LPG sector in the country in recent years. Furthermore, a growing population and increased disposable income are driving the rapid growth of the hotel industry in emerging nations. It is anticipated that this will in turn create profitable growth prospects in the years to come.
https://www.pmuy.gov.in/about.html
Furthermore, as there is a large latent demand for LPG in the majority of nations, where LPG supply capacity and distribution facilities remain underdeveloped, LPG demand from the residential and commercial sectors will continue to be a major driver of future demand growth. Growth potential and incremental demand for LPG have been demonstrated by the emergence of new LPG markets in China and South Korea. Furthermore, butane is a necessary ingredient in LPG. The percentage of butane and propane gases in the LPG mixture can vary from 100% propane to 20% propane and about 80% butane, depending on the country and region. Over the course of the projection period, the global market is predicted to rise as new LNG projects and refineries contribute to the LPG sector's expected growth.

• Growing Industrial Sector Demand for Butane driving the market growth

For the petrochemical production of ethylene and other derivatives, butane is utilized as a feedstock. Butane is also utilized as a fuel for cigarette lighters and as a feedstock component in the manufacture of base petrochemicals. It is also a component of gasoline in steam cracking. Furthermore, the majority of regular butane is blended with gasoline, especially during the colder months when isobutane is scarcer as a result of isomerization, which also converts regular butane into isobutane. One can utilize regular butane as a feedstock for petrochemicals. Up to 27 million cars worldwide are powered by Autogas, a propane and butane blend. It is the third most used automotive fuel worldwide.
https://www.iac.org.in/cleaner-air#:~:text=Autogas%20%2D%20also%20called%20Automotive%20LP,contributing%20significantly%20to%20cleaner%20air.
Moreover, isobutane—whether it comes from refineries, natural gas plants, or isomerization from ordinary butane—is utilized to produce alkylates, which increase the octane and decrease the volatility of gasoline. High-purity isobutane can be used as a refrigerant. Because it is less expensive and has less of an impact on the environment, maleic anhydride based on n-butane is the one that is most commonly utilized. Isobutane is used in 392 formulations at up to 98% in nail products, according to data on frequency of use and concentration of use from 2023 and 2022; in powder goods, it was reported to be used in 338 formulations at up to 83% in 2001.
https://www.cir-safety.org/sites/default/files/Isobutane.pdf
As a result, the expanding needs for butane from the petrochemical and automotive industries are driving up global demand for it. It is anticipated that this tendency will continue during the projection period.

Constraints for the global Butane Market

• Price volatility for raw materials hindering market growth

Butane is a liquid gas formed from petroleum that is obtained from gas processing facilities as a byproduct of the production and refinement of crude oil. Like the price of crude oil, gas prices change every day. The remaining amount of the price of gasoline is made up of business profits, state and federal taxes, and the costs of the refinery and distribution. Because of things like changes in supply and demand as well as fluctuations in the price of crude oil, butane prices are never stable. Therefore, it is expected that the volatility of oil prices will negatively impact the butane producers' earnings.
Moreover the price volatility is leading consumers towards alternatives. A major threat to the worldwide butane market is the high demand for natural gas, primarily methane. The plentiful supply of natural gas renders it a compelling choice for customers. Oil demand is expected to peak around 2030, mostly due to road transportation, and the increasing popularity of electric vehicles (EVs) will play a part in this change. Once considered to be in its "golden age," natural gas is likewise expected to peak by 2030 as demand declines and growth slows in the building and power industries.
https://www.downtoearth.org.in/blog/climate-change/iea-world-energy-outlook-2023-fossil-fuel-demand-to-peak-by-2030-urgent-investment-shift-needed-92538#:~:text=and%20steel%20production.-,Oil%20demand%2C%20primarily%20driven%20by%20road%20transport%2C%20is%20set%20to,the%20power%20and%20building%20sectors.
Natural gas can also be more widely used since it is cleaner than other fossil fuels and because governments all around the world are enforcing strict environmental restrictions. Numerous natural gas pipeline projects are being built worldwide, which could impede the expansion of the LPG market.

Opportunities for the global Butane Market

• Growing use of auto gas will ensure future market growth

Auto gas, or automotive liquefied petroleum gas, is a fuel used in automobiles in various parts of the world. Compared to other fuels or energy sources, auto gas burns easily and has a high energy level. The previous several years have seen a sharp rise in the consumption of motor gasoline, mostly because of its advantages for the environment. Through a variety of programs, national governments around the world have been encouraging the use of autogas. Throughout the anticipated years, the market is expected to be driven by the increasing use of butane in the manufacturing of vehicle gas.
With an estimated 2.5 million LPG, or Autogas-powered vehicles, India ranks among the top five Autogas markets globally in terms of fleet size. However, the autogas industry is still very tiny, with only approximately 350 000 tonnes of fuel sold at filling stations, placing it near the bottom of the list of the world's top markets.
https://auto-gas.net/mediaroom/autogas-in-india-back-in-business/

Impact of COVID-19 on the Global Butane Market

The COVID-19 pandemic has affected the majority of daily industrial and commercial operations worldwide. Examples of the difficulties the sector faced during the Coronavirus include a lack of workforce, delays in supply and logistics, a decline in end-user demand, and more. Different nations have responded to the epidemic in different ways, which has affected supply and demand. For example, in India, the pandemic's uncertainty led to an overestimation of the need for LPG, which drove up sales in March and April. The Oil Ministry reports that during the fiscal year (April 2020 to February 2021), domestic LPG sales increased by 10.3%. The other sectors have also begun to open up since the COVID era, which has kept the demand for butane high and its use in the residential sector, which had not suffered much since the epidemic, at bay. Consequently, in the post-pandemic age, there is a beneficial impact on the demand for butane. 
https://iocl.com/NewsDetails/59164

Due to lockdowns, which closed the majority of hotels and other similar enterprises, there was a huge decline in the demand for LPG in the commercial sector. There have been reports of similar circumstances in other nations where tight lockdown regulations were put in place. The COVID-19 strike consequently increased the demand for butane because LPG consumption for cooking has been expanding globally. People were forced to cook at home because of the worldwide lockdown imposed due to the rising risk of COVID-19 infection. This factor was the catalyst for the global market's expansion.

The market for butane will grow in response to the expanding need for petrochemicals in order to meet this expanding demand. Petrochemicals are used in many different industries, such as textiles, paints, and plastics. Thus, as butane becomes more and more necessary in the petrochemical industry, there will likely be a rise in the demand for it.

Frequently Asked Questions