The Trump Administration created more uncertainty for the shipping industry with its order this week that companies shipping goods to China must seek export licences.
Chinese purchases of US ethane, a key petrochemical feedstock, are under a cloud of doubt after the Commerce Department told exporters to seek licences to export to China, according to trade sources and shipping data.
Washington ordered a broad swathe of companies to stop shipping goods, including ethane and butane, to China without a licence and revoked licences already granted to some suppliers, Reuters reported on Wednesday.
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The move is the latest disruption in Chinese purchases of US ethane, which hit a record of 492,000 barrels per day in 2024, or nearly half of US exports, according to the US Energy Information Administration.
Early last month, China increased levies on imports of US goods to 125% but waived the tariff for petrochemical producers who rely on the United States for almost all their ethane imports.
Large carriers at US ports
At least two Very Large Gas Carriers were waiting at US ports to load ethane this week, while 15 more tankers are headed to, or waiting off, the US Gulf Coast, to load about 284,000 bpd of ethane in June, Kpler data showed.
“It’s going to be a major issue if all exports are suspended,” said a Chinese ethane importer, who sought anonymity because he is not authorised to speak to media.
“We are cautiously watching if exporters can obtain new export licences soon.”
VLGC Pacific Ineos Grenadier was supposed to load ethane for Ineos at Enterprise Products Partners’ Morgan’s Point terminal at La Porte, Texas, has docked there since last Friday, Kpler and LSEG data showed.
Stl Qianjiang is anchored near Energy Transfer’s Nederland terminal, due to load ethane for Chinese petrochemical firm Satellite Chemical, the data showed.
Enterprise, Energy Transfer and Ineos did not immediately respond to requests for comment outside office hours while Satellite Chemical could not be reached for comment.
Market disruption
“The market disruption could be immediate,” Julian Renton, an analyst at East Daley Analytics, said in a note.
A trade source said Ineos, which also buys ethane for its plants in Europe, may divert its cargo there.
In a filing, Enterprise, a top handler of ethane and butane, said it was evaluating its procedures and internal controls and could not determine if it would be able to get a licence.
Traders said there may be limited near-term impact on Chinese operators, as they have sufficient stocks.
East Daley’s Renton said if the restriction holds, Chinese petrochemical plants could face critical feedstock shortfalls, while projects may stall.
Chinese petrochemical firms use ethane as a cheaper feedstock alternative to naphtha, while US oil and gas producers count on China to buy their natural gas liquids as domestic supply exceeds demand.
Shares of ethane importers Satellite Chemical were down 3.1% on Friday, while Wanhua Chemical stock lost 1.3%.
Reuters with additional editing by Jim Pollard
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