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Jan 16, 2020 2:54 AM ET

Butane Market is Forecast to Grow at CAGR of 7.30% During 2020-2025

Butane Market is Forecast to Grow at CAGR of 7.30% During 2020-2025

iCrowd Newswire - Jan 16, 2020

Butane Market is forecast to reach $115.96 billion by 2025, after growing at a CAGR of 7.30% during 2020-2025.The global demand for butane is rising due to its growing demands from automobile and petrochemical industries and this trend is projected to persist even during the forecast period. Butane is mainly used as LPG in residential and commercial purposesfor heating and cooking purposes. Moreover, increasing usage of butane in power generation is driving the demand for butane market during the forecast period.
Key Takeaways
  • North America is the second largest region for butane market during the forecast period. The rapid advancement in the shale revolution in the U.S. have positively impacted the butane market.
  • LPG is used both for domestic and industrial premises in centralized heating solutions. Some other industries that depend mostly on LPG are food processing and paper industries. LPG is also used to produce electrical energy by running turbines.
  • Butane market is expected to grow because of the popularity of auto gas as it is cheaper than diesel and gasoline. According to World LPG Association, there are more than 27million auto gas vehicles in use around the world with over 15million vehicles in Europe.
By Type- Segment Analysis
N-Butane segment held the largest share in the butane market in 2019. N-Butane is linked in straight chain and is blended with gasoline to increase its volatility. It is derived as a by-product during crude oil refining and is extracted during the gas processing plants located near natural gas or crude oil reservoirs. 
By Application – Segment Analysis
Liquefied Petroleum Gas (LPG) held the largest share in the butane market in 2019.As butane is one of the main feedstocks used to produce LPG, the extensive adoption of LPG as a domestic and automotive fuel worldwide would serve as another essential expenditure growth-promoting factor. The automobile industry is a prominent end user of LPG. This attributes to the environmental benefits exhibited by LPG when used in automotives as it is an efficient substitute to fossil fuels.
Geography- Segment Analysis
Asia-Pacific dominated the butane market with a share of more than 42.3% during the forecast period. China and Indiaare the major contributing nations because of supportive government policies and subsidies which in turn has resulted in increased demand of butane. According to HIS Global Outlook, global LPG trade volumes increased 36% between 2010 and 2015 due to increased demand from urbanizing populations in China and India, and widespread government policies to encourage fuel switching in these as well as other countries. 
Drivers –Butane Market
  • Government initiatives and policies to drive the usage of LPG
Increasing number of government initiatives for subsidies in China, India, and Indonesia to promote LPG adoption over other fossil fuels is supporting the growth of industry. The Indian government initiated the Pradhan Mantri Ujjwala Yojana (PMUY) program in 2016, through which the government aimed at distributing 50 million LPG cylinders to families below the poverty line.The government of Indonesia initiated Kerosene to LP Gas Conversion Programme to promote the use of LPG and avoid the use of kerosene as cooking fuel among the households in the region. The Indonesian government distributed 3 kg refillable LPG cylinders along with a stove to the households under the scheme.
Challenges – Butane Market
  • Groundwater contamination & strict environmental regulations
Ground water contamination caused by methyl tert-butyl ether (MTBE) leakage will hinder market growth. In addition, the increasing popularity of ethanol as an alternative to gasoline may inhibit butane demand. The global butane market has to adhere to stringent regulatory norms because of high incidence of human health hazards due to the inhalation of this gas.
Implementation of strict mandates by the Environmental Protection Agency (EPA) regarding additives & fuels has led to a ban on the use of MTBE in gasoline blending. This is done as a means to manage the problem of groundwater contamination. 
Market Landscape
Technology launches,acquisitions and R&D activities are key strategies adopted by players in the butane market. In 2019, the market of butanehas been consolidated by the top five players accounting for xx% of the share. Major players in the butanemarketExxonMobil, Sinopec, British Petroleum, Conoco Phillips, Chevron, Valero Energy, CNPC, and Total SA among others.
Agreement/ Geographical Expansion
  • In October 2019, ExxonMobil signed a preliminary agreement with Indian Oil Corporation to explore new models of delivering cost-effective natural gas in India.
  • In August 2019, Chinese CNPC-led group discovered new oil field in South Sudanwith more than 300 million barrels of recoverable oil. 

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