The global butane market size was valued over USD 60 billion in 2015. Its demand exceeded 138.22 million tons the same year. The industry is expected to reach nearly USD 82 billion by the end of the forecast period (2016-2024). Butane is a highly flammable, odorless, and colorless gas. It can be liquefied easily. C4H10 is its chemical formula. The compound that has carbon atoms linked in a straight chain denotes normal or n-butane. The one with a branched-chain is known as isobutane.
Commercially, n-butane is blended with gasoline to increase its volatility and is transformed to isobutene in refineries. The process is known as isomerization. It is derived as a byproduct during crude oil refining. It is extracted during the gas processing plants located near natural gas or crude oil reservoirs. It belongs to the family of paraffinic hydrocarbons.
The rising demand for Liquid Petroleum gas (LPG) can positively impact the industry. Moreover, rising standards of living & disposable incomes may boost butane market demand over the next couple of years. When butane is mixed with propane in a certain proportion, it is often referred to as LPG. Two thirds of the butane manufactured worldwide is utilized in LPG.
In Asia Pacific & Africa, LPG is widely used as a domestic fuel. This could drive the global industry over the next few years. Governments across these regions promote & encourage the use of LPG to reduce carbon footprints & CO2 emissions. LPG emits approximately 33% lesser CO2 as compared to coal. A number of governments nowadays are levying subsidies to promote the use of LPG. This may propel the butane industry in the long run.
In addition to this, LPG finds use in residential, commercial, and agricultural applications. The automobile industry is also a prominent end user of LPG. This attributes to the environmental benefits exhibited by LPG when used in automotives. LPG is an efficient substitute to fossil fuels. Increasing demand for energy in heating & cooking may propel the LPG industry. This in turn can augment global demand for butane till 2024.
However, ground water contamination caused by methyl tert-butyl ether (MTBE) leakage could hinder market growth. Moreover, the growing popularity of ethanol as an alternative to gasoline can inhibit demand for butane. 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. However, the use of MTBE for gasoline blending is prevalent in Asia Pacific & the Middle East because of relaxed governmental norms.
The global industry is divided into applications and regions. On the basis of applications, the butane market is segmented into LPG, petrochemicals, refineries, and others. LPG is further split into residential & commercial, chemical & petrochemical, autofuel, industrial, refinery, and others. LPG dominated the applications segment with shares accounting for more than 66.6% in 2015. Growing use of LPG in commercial & residential uses can propel market growth. The residential or commercial segment may contribute to over 50% of the overall industry in the forecast period.
Isobutane on the other hand, can be used as an alternative to hazardous chlorofluorocarbons (CFC). CFC is used extensively in the production of deodorants, propellants, cigarette lighters, and refrigerants. Use of butane in refineries enhances its flammable qualities. This can positively impact the market during the forecast period.
‘Petrochemicals’ is expected to be the fastest growing application segment till 2024. Growth of the ethylene industry in the Middle East is one of the key factors stimulating the demand for butane. It is one of those raw materials that are enlisted in the feedstock slate of several petrochemical complexes for the manufacture of ethylene. It is extensively used in the production of ethylene and butadiene in the Middle East.
LPG used as an automobile fuel. Its demand is projected to increase significantly owing to strict emission norms and greater adoption of environment friendly vehicles. Increasing investments in LNG production and research & development (R&D) of butane gas can contribute to the worldwide demand from 2016 to 2024.
Regions in the global market are North America, Central & South America (CSA), Europe, Asia Pacific, and Middle East & North Africa (MENA). Asia Pacific was valued nearly USD 22.17 billion in 2015. It is expected to grow at a CAGR of approximately 4.2% over the forecast period. Growth of this region can be attributed to the increasing demand for fuel gas. Growing population coupled with rising need for energy for cooking and for fuel could propel the market in the rural regions of China and India. Favorable governmental mandates pertaining to multiple connections & subsidies can contribute considerably to the demand for LPG and subsequently for butane.
The Indian government initiated the Rajiv Gandhi Gramin LPG Vitaran program to supply low cost LPG to the rural areas of the country. Such governmental support can be favorable for the global industry. The Indonesian government introduced paraffin-to-LPG conversion to encourage the use of the product in the country.
The North America petrochemical industry can witness robust growth in the forthcoming years. Abundant supply of shale gas in the U.S. can steadily support the demand for natural gas liquids; indirectly fueling the global butane market.
The MENA butane industry held more than 18% of the overall market (in volume terms) in 2014. Greater use of LPG in feedstock substitution for crude oil & natural gas in refineries and in chemical industries may positively impact demand for the product in the region. The market could register high growth rates in countries, like Nigeria, United Arab Emirates (UAE), Saudi Arabia, and Qatar.
Popularity of autogas because of the cost benefit as against that of diesel & gasoline may favor this industry. There were over 24 million units of autogas vehicles in the market in 2014. It is widely used in countries, such as Russia, Poland, Italy, Turkey, and South Korea.
Chevron Corporation, Exxon Mobil Corporation, British Petroleum (BP), and ConocoPhillips Inc. are the key market players in the global butane market. Exxon Mobil Corporation has emerged an industrial leader. Companies, like Valero Energy Corporation and Total S.A., Sinopec Group offer their services to industrial, nuclear, and refining power sectors.
Companies focus greatly on product innovation. Furthermore, they also actively participate in business ventures besides investing robustly in R&D of bio-based alternatives to produce niche products.
Research Support Specialist, USA