The U.S. Commerce Department now requires exporters to obtain licenses before shipping ethane and other natural gas liquids to China. Previously, many companies sent ethane and butane cargoes without formal permission. Now, those shipments must halt until new licenses are granted.
Potential Disruption to Record Volumes
China’s imports of U.S. ethane are set to reach a record 492,000 barrels per day in 2024, nearly half of all U.S. ethane exports. The new licensing rule threatens that flow and could interrupt China’s supply of this key petrochemical feedstock.
Tankers Waiting at U.S. Gulf Coast
At least two very large gas carriers have been unable to load ethane at U.S. ports since the license rule took effect. Another 15 tankers, carrying about 284,000 barrels per day of ethane for June loading, are anchored or en route to the Gulf Coast. If licenses remain unavailable, these vessels will face extended delays.
Industry Responses and Risk of Supply Shortages
U.S. exporters such as Enterprise Products Partners, Energy Transfer, and Ineos are reviewing their procedures to comply with the new rule. In filings, Enterprise warned it may not secure licenses in time. Meanwhile, China’s petrochemical plants have built up inventories, which could ease a short-term shortage. However, if the restriction continues, Chinese factories may face severe feedstock gaps, jeopardizing planned projects.
Market Impact and Possible Alternatives
Shares of major ethane importer Satellite Chemical fell 3.1% following the news, and Wanhua Chemical dropped 1.3%. Some traders suggest U.S. suppliers could redirect ethane shipments to Europe to offset lost Chinese demand. Still, analysts warn that a prolonged halt in China-bound exports could thrust the market into immediate disarray.
Long-Term Outlook for Petrochemical Trade
China relies on ethane as a cheaper alternative to naphtha for its petrochemical industry. U.S. oil and gas producers count on strong Chinese demand to absorb their growing natural gas liquids output. The new licensing requirement adds uncertainty to this trade relationship and could force both sides to seek new strategies for securing essential feedstocks.
