The federal government has intensified its trade restrictions by requiring Energy Transfer to obtain a license to continue exporting ethane to China, marking a significant development in the ongoing trade conflict between the two nations.
The dispute has already severely disrupted the trade of ethane and propane between the United States and China. The government’s recent demand for export licenses underscores its efforts to control shipments of key petrochemical feedstocks. According to Reuters, Enterprise Products Partners—another major U.S. ethane exporter—has faced a similar requirement and both companies have submitted emergency requests to maintain their export activities.
U.S. propane exports reached an unprecedented peak last year, the highest since records began in 1973, driven by a 17-year upward trend fueled by surging natural gas production and rising petrochemical demand in Asia, particularly China, the Energy Information Administration (EIA) reported recently.
China stands as the largest importer of U.S. ethane and the second-largest buyer of U.S. propane. EIA data reveals that nearly half of U.S. ethane exports worldwide are shipped to China. In propane terms, China imports approximately 360,000 barrels per day (bpd), compared to 1.5 million bpd supplied to the rest of the global market.
The U.S. Commerce Department has justified the licensing requirement by expressing concerns that ethane exported to China could be used in the production of military-related goods. In a notable move, the department denied Enterprise Products Partners’ emergency application for authorization to export three ethane shipments totaling 2.2 million tons destined for Chinese customers.
This regulatory shift presents significant challenges for U.S. producers, as China remains the dominant buyer of these petrochemical commodities. No alternative markets currently match China’s scale, raising uncertainties about the future of U.S. ethane and propane exports amid escalating geopolitical tensions.
