China has removed a 125% tariff on U.S. ethane imports that was imposed in early April. This move is expected to boost U.S. ethane production and exports, according to the U.S. Energy Information Administration (EIA).
Ethane, a natural gas liquid used mainly to produce ethylene, is a key raw material in the petrochemical industry. The EIA forecasts U.S. ethane output to grow from 2.8 million barrels per day in 2024 to nearly 3 million barrels per day this year and slightly more next year. Most of this increase is expected to be exported to meet rising demand abroad.
However, U.S. exporters now face new rules. The U.S. Department of Commerce requires export licenses for shipments of ethane and butane to China. This could slow deliveries until exporters obtain the necessary approvals.
Enterprise Products Partners, a major U.S. ethane exporter, warned it may face delays or difficulties securing these licenses. The Bureau of Industry and Security (BIS) mandates that exporters apply for validated licenses before shipping ethane or butane to any party in China or to Chinese military end users.
China remains a key market for U.S. ethane, but these licensing requirements could cause short-term disruptions. Still, demand for U.S. ethane is likely to grow as Asian petrochemical companies shift from using naphtha to cheaper ethane amid tighter chemical margins.
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