By Frans Koster
New US restrictions on ethane exports to China, enacted by the Bureau of Industry and Security in May 2025, are creating significant challenges for US producers while having a limited impact on China's petrochemical industry. The policy, which requires special licenses for shipping and unloading ethane in China, has led to a 22.4% drop in US ethane exports, from 541,000 barrels per day in April to an estimated 420 US ethane exports by 22.4% from April to June, dropping from 541,000 to 420,000 barrels per day, with prices falling from 25¢ to under 22¢ per gallon at Mont Belvieu, Texas. With approximately half of US ethane exports typically destined for China and few alternative markets available due to infrastructure limitations, domestic oversupply is growing, pushing the market into contango. Philip Luck of the Center for International and Strategic Studies warns that “the US export controls on ethane could not only inflict real economic harm on United States producers and exporters but also fail to constrain China’s petrochemical sector due to its feedstock flexibility and engineered redundancy.”The restrictions, possibly a US trade negotiation strategy to pressure China, are less effective than anticipated. China’s petrochemical industry relies on ethane for less than 10% of its feedstock, and its steam crackers can readily switch to alternatives like naphtha. “In order to make up for the lost ethane, China would have to consume about 360,000 b/d of additional naphtha,” said Kristen Holmquist, managing director of analytics at RBN Energy. She added that China’s crackers are currently running well below capacity, which means they “can easily absorb the extra 360,000 b/d of naphtha needed to make up for the lost production from ethane feedstock.” With no restrictions on naphtha or ethane-derived products, China’s adaptability mitigates the impact, while US producers face mounting economic pressure.
Read the full article here US Ethane Export Restrictions Push Flows, Prices Lower | Energy Intelligence
