Some analysts expected that Increasing demand from residential customers and lower output from refineries in Latin America is expected to boost the region’s LPG imports despite the economic contraction caused by the coronavirus pandemic. Virus containment measures are likely to boost residential LPG use as more people stay at home.
About 25% LPG production in the region comes from refinery operations which have been slowed down by the coronavirus pandemic. Meanwhile, the rest 75% comes from natural gas processing which is expected to remain stable in the short term. However, it is set to decline through the end of 2020, and it will take time to recover when the economy improves.
Some analysts believe that Latin America’s LPG demand would continue 2% year-on-year growth this year. However, it remains unclear whether increasing residential consumption will offset the decline in demand from the commercial and industrial sectors. Latin American countries entered quarantine much later, and the following data will reflect the initial impact of the coronavirus outbreak in the region. The impact is also expected to vary across countries.
Residential customers contribute to 93% of LPG consumption in Brazil. Despite the health crisis, LPG demand in the country has grown by 6% over the last few weeks. Region-wide, residential and commercial users accounted for 70% of LPG demand.
Latin America is expected to see a 4.9% GDP contraction this year, with Mexico expected to suffer 7.1% fall this year. The outlooks for other major economies in the region, such as Brazil (-4.5), Argentina (-5.4), Colombia (-2.2), Chile (-4.7), and Peru (-2.5) are also bleak.
