Imports of ethane feedstock for Chinese petrochemical plants are set to rebound in August after the US Bureau of Industry and Security (BIS) removed export restrictions on ethane shipments to China, said Chemweek.
“Loading will be resumed soon, partly compensating for the reduction in June due to the restrictions,” said a source at an ethane-fed steam cracker in eastern China.
“Lifting the restriction is simply a matter of timing, as disrupting trade flows hurts both China and the US. One side needs to buy, while the other needs to sell,” said a Shanghai-based chemical analyst.
Leading US ethane exporters Energy Transfer LP and Enterprise Products Partners LP filed statements on July 2 indicating they received letters from the BIS stating that the previously required licenses for the export, reexport or transfer (in-country) of ethane to parties in China, including Chinese military end users, have been rescinded, effective immediately.
Due to the restrictions, which BIS notified companies of in late May and early June, ethane cargoes loaded from the US to China were suspended from May 28 to June 17. Some cargoes loaded in June were diverted to other destinations, such as India, despite China being the usual destination, according to S&P Global Commodities at Sea (CAS) data.
As a result, arrivals to China in July are likely to drop from 300,100 b/d in June to about 97,100 b/d, the lowest since 95,600 b/d in December 2021, CAS data showed. It usually takes about 35 days for an ethane cargo to travel to China from the US.
The US Energy Information Administration previously projected that US ethane exports would decrease by 80,000 b/d in 2025 and by 177,000 b/d in 2026 if the licensing requirements for US exports of ethane to China remain in place.
Analysts and industrial sources said the cargoes to Chinese petchems producer Satellite Chemical are expected to contribute most of the rebound in the July loading for August delivery.CAS data showed that Jiangsu province, where Satellite Chemical is based, received an average of 203,000 b/d of US ethane over the last 12 months, July 2024 to June 2025.
This accounted for more than 75% of China’s imports in the same period.Due to the US export restrictions, deliveries to the province in July were likely to slump 86% to 28,900 b/d from the average volume, according to CAS.Unlike its ethane-fed chemical peers, Satellite Chemical is wholly reliant on US ethane as feedstock.Enterprise analysts said the intense volatility in US-China ethane trade flows in recent months has led ethane-fed chemical plants to reconsider their dependency on US supplies, despite Satellite Chemical’s strong profit performance last year.Before the BIS noticed the export restriction, US ethane had been included in China’s additional tariffs list amid the trade conflict between the top economies.China’s ethane imports dropped 35% month over month to about 204,000 b/d in May due to the additional tariffs. But the volume rebounded by 47% in June following Beijing’s decision to exempt US ethane from additional tariffs in late April/early May, CAS data showed.According to Platts, China’s imported ethane-based ethylene capacity — almost all of which is independent — now stands at roughly 4 million metric tons per year.The capacity can be translated into about 248,000 b/d of imported ethane feedstocks requirement, which is spread across five plants in eastern China’s Jiangsu, Zhejiang and Shandong provinces.Unlike Satellite Chemical, the four other plants have more feedstock flexibility to process alternatives naphtha, LPG and domestically produced ethane.
Source: Reuters